The chief executives of the UK’s largest high street banks will face the City watchdog today amid accusations they are ‘profiteering’ as savings rates offered to customers lag well behind surging borrowing costs.
Bosses including NatWest’s Alison Rose, HSBC UK’s Ian Stuart, Barclays UK’s Matt Hammerstein, and Lloyds Banking Group’s Charlie Nunn, will meet the Financial Conduct Authority (FCA) as they come under pressure to justify their decision to keep easy access savings rates low, while the cost of loans and mortgages has soared.
Smaller lenders including Nationwide have also been summoned to the meeting at the regulators’ headquarters in Stratford, east London, which will be led by the FCA’s executive director of consumer and competition, Sheldon Mills.
The meeting is part of the FCA’s investigation into the savings market, due later this month. But regulators also plan to warn lenders they will have to justify their pricing once new consumer duty rules come into force at the end of July.
The new regulations will force all City firms, including high street lenders, to show they are acting in good faith and prioritising customer needs, including their decisions on savings and mortgage rates.
All of the big four banks reported bumper profits in the first quarter of the year as they benefited from a surge in net interest income – which accounts for the difference between what it pays savers and what it charges borrowers.
NatWest reported a 50% jump in profits over the first three months of the year to £1.9bn, while rival Lloyds reported a 46% rise in earnings. HSBC, meanwhile, tripled its first-quarter profits to $12.9bn, and Barclays revealed its largest quarterly profit since account standards changed in 2011.
MPs on the influential Treasury committee have accused the banks of “profiteering” and failing in their “social duty” to promote saving across the UK.
Labour MP Angela Eagle, said: “In the middle of a cost of living crisis, the high street banks are squeezing higher profits from their loyal savings customers. This blatant profiteering has been shocking, and it’s clear to me this behaviour is miles away from the incoming requirement for firms to treat their customers fairly and with respect.”
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Barclays said earlier this week that it regularly reviewed its savings product rates, while HSBC said it had increased savings rates “more than a dozen times” since the start of 2022, and that its range of accounts offered customers choice on how to manage their money “with competitive returns”.