Big banks accused of doing little for savers

Big banks are doing “as little as they can get away with” when setting higher savings rates for loyal customers, an influential group of MPs has said.

The Treasury Committee has been scathing of the returns being offered to savers by the major High Street banks as interest rates have risen.

It has called on customers to shop around for better deals.

UK Finance, the UK banking trade body, said the market was competitive and returns had risen significantly.

New Bank of England figures suggest people have been shifting their savings to get better interest rates.

The Treasury Committee has consistently raised concerns about whether the rising Bank of England benchmark interest rate is being passed on in full to savers.

In July, it accused them of offering “weak excuses” for low rates.

Banks have been reporting their results in recent days, with HSBC the latest to reveal higher profits. It is one of the so-called big four, which also includes Barclays, Lloyds and NatWest.

In response. Harriett Baldwin, who chairs the Treasury Committee, said: “The big four banks have been far too slow to reward savers through better rates on instant access savings accounts.

“The figures published in the past week still show signs that the banks are trying to do as little as they can get away with to reward our constituents for saving. We will continue to press for individual and business savers to be rewarded. Meanwhile, savers should shop around for the best rate.”

She suggested that “savvy consumers” were looking around for better deals, a view backed up by the latest figures from the Bank of England which were published on Monday.

The data showed that £7.7bn was deposited into Treasury-owned National Savings and Investments (NS&I) in September, the most in a single month for three years, and up sharply from the £300m deposited in August.

NS&I was offering a market-leading fixed deal at the time, which required savers to lock away their savings.

This type of account, offered across various providers, currently has an average interest rate of 5.21%, compared with a 1.96% average return on easy-access accounts.

Alice Haine, personal finance analyst at investment platform Bestinvest, said: “The era of cheap money is well and truly over, so households should prioritise clearing expensive unsecured debt and building up a rainy day pot to withstand any unexpected expenses.

“Those fortunate enough to have spare money to save should move fast, as the top deals get snapped up quickly.”

In response to criticism, bank bosses have argued that attempts have been made to encourage savers to look at all the available deals.

A spokesman for UK Finance, which represents the major banks, said: “Savings rates have increased a lot recently and the market is highly competitive. What’s more, recently published financial results have highlighted that customers are moving money into savings accounts.

“Firms are already contacting millions of customers to help them better understand their savings and the options available to them.”

There is a guide to different savings accounts, and what to think about on the government-backed, independent MoneyHelper website.