The UK’s four largest high street banks have been criticised by the Treasury Select Committee for making “weak excuses” over savings rates offered to their customers.

Barclays, HSBC, Lloyds and NatWest had previously been called upon by the cross-party Committee of MPs to increase rates across their savings offerings.

Earlier this month, the Committee had asked the chief executives of the UK’s largest banks if all their savings products provide “fair value” to customers, as well as whether customer inertia is being exploited and what steps they’re taking to notify their customers of higher rates available.

In a letter to the Financial Conduct Authority (FCA), the Committee also asked about the incoming Consumer Duty – a requirement for firms to always act in good faith and deliver “fair value” for their customers – which is due to come into force at the end of the month. The regulator was asked how “fair value” will be assessed, what action it can take if firms do not comply with the consumer duty, and how it will judge whether banks are making enough effort to encourage savers to switch to higher rates.

In response to the Committee, the FCA has confirmed that it expects firms to ensure customers are “informed of available rates across their product set and how they may benefit from switching”.

At present, the big four banks offer easy access savings rates between 0.9% and 1.75%, despite a flurry of interest rate increases by the Bank of England that have left its base rate currently sitting at 5%.

Chair of the Treasury Committee, Harriett Baldwin, said: “If the high street banks continue to pay poor savings rates on their instant access accounts, they should make sure their customers know that better rates are available. Given that the Government, regulator and Governor of the Bank of England agree with the Committee that action is required, the time for weak excuses is over.

“We thank the banks and the regulator for taking the time to respond to our letters. This is a topic of utmost interest to our Committee and one we will continue to monitor closely, especially when the banks report their half year results in the coming weeks.”

The Committee is holding an accountability hearing with the chair and chief executive of the FCA at 2.15pm tomorrow (19 July).

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