Savers were urged yesterday to boycott banks that have not passed on this month’s rise in interest rates.
A senior Bank of England official said families should shop around for a better deal if they are missing out.
The Bank’s base rate went up by 0.25 percentage points three weeks ago but just one in seven savings accounts has followed suit.
Barclays, Lloyds, Santander, Halifax, NatWest, HSBC and RBS have not passed on the full rate rise to all customers. Banks have been much quicker to raise their mortgage rates
Barclays, Lloyds, Santander, Halifax, NatWest, HSBC and RBS have not passed on the full rate rise to all customers. Banks have been much quicker to raise their mortgage rates.
Sir Jon Cunliffe, who is a deputy governor of the Bank, told MPs yesterday there were often ‘lags’ between its hikes and changes in high street savings rates.
But he said where rates did not move savers should check best-buy tables and say: ‘If I can get a better rate elsewhere I should do that.
‘The Government has put a lot of effort into making it easier for bank accounts to move.’
Sir Jon Cunliffe, who is a deputy governor of the Bank, told MPs yesterday there were often ‘lags’ between its hikes and changes in high street savings rates
The Bank raised rates to 0.5 per cent on November 2 – the first rise since July 2007 and a boost for savers hammered ever since the financial crisis. Theresa May’s official spokesman said at the time: ‘We would expect to see higher interest rates passed on to savers. Some banks have already said they will pass on the increase to savers and we would expect others to follow suit.’
Announcing the rate hike, Bank governor Mark Carney said: ‘We do expect it to be passed on. Obviously we will be watching closely.’
Yet savings rates have gone up on just 15 per cent of accounts, according to the website Savings Champion. Lloyds will increase just nine of its 20 variable savings rates – and not all of these will get the full 0.25 percentage point increase.
Halifax, part of Lloyds, will increase 16 of its 27 variable rates at the start of next month.
But savers in its 60 Day Gold, Bonus Gold Account, Monthly Saver and Passbook accounts will receive an increase of just 0.05 percentage points to 0.1 per cent.
Barclays will increase 12 of its 14 variable accounts by an average of 0.15 percentage points. Just eight accounts will receive the full 0.25 percentage point increase.
Santander is set to increase just a quarter – nine of its 35 variable rate accounts. Customers in its Instant Saver, for example, will see their rates rise from a meagre 0.01 per cent to 0.1 per cent – just 0.09 percentage points.
However 80 per cent of Nationwide’s variable rate accounts have seen an increase.
Mark Rennison, the mutual institution’s finance chief, said: ‘We could have taken a different decision and used this as an opportunity to widen margins, as it appears some of our banking competitors may be doing.
But given current performance that was neither necessary nor appropriate for a member-owned society.’
Mark Rennison, the mutual institution’s finance chief, said: ‘We could have taken a different decision and used this as an opportunity to widen margins, as it appears some of our banking competitors may be doing’
Tory MP Nicky Morgan, who chairs the Commons Treasury committee, said: ‘Many savers are older people. They rely on the interest rates on their savings. They have had almost no interest for a long time now.
‘Isn’t it reasonable that when the base rate does change that banks should react to that and treat their savers to that increase?’
Sir Jon, who was giving evidence to the committee, said it was not up to the monetary policy committee, the panel at the Bank of England that sets rates, to force lenders to pass on hikes to savers.
‘As a citizen I might well agree that that is what I would expect to happen but from an MPC point of view we have enough responsibility already without pushing into those areas,’ he said.
Ian McCafferty, who also sits on the nine-strong MPC, said: ‘If there is evidence that the competitive market is not functioning properly such that these changes in Bank rate get passed through over the course of time then it I think it’s a recourse to the competition authorities.’
He added: ‘It’s the role of the competitive market to determine what individual banks charge. There are a number of banks – those that are usually branched in the challenger category – where we’re seeing a little bit more reaction.
‘And I would hope and I fully expect that over time, the competitive nature of the market as far as savers are concerned would therefore lead banks who may be a little more slower to react, to have to react to that competitive pressure.’
Anna Bowes of Savings Champion said: ‘Some of those providers who have not passed on the full base rate rise will claim that this is because they didn’t cut rates by the full amount last August, when the base rate fell to 0.25 per cent.
Ian McCafferty, who also sits on the nine-strong MPC, said: ‘If there is evidence that the competitive market is not functioning properly such that these changes in Bank rate get passed through over the course of time then it I think it’s a recourse to the competition authorities’
‘However, when accounts such as the Halifax Liquid Gold were paying just 0.1 per cent at the time, it was impossible to pass on the full drop.
‘Any savers who discover that they are languishing in one of these appalling accounts should look to switch immediately, as there are much better rates available.’
A spokesman for UK Finance, the banking trade body, said: ‘Providers must balance the increased cost of customer borrowing with the savings returns they offer when competing for business, while serving both savers and borrowers in a fair and transparent way.’
The best easy-access account is with Charter Savings Bank. It pays 1.32 per cent, according to Savings Champion.