Get all your news in one place.
100’s of premium titles.
One app.
Start reading
Evening Standard
Evening Standard
Business
Jonathan Prynn

Watchdog is right to squeeze banks on savers’ behalf

Last time I checked my Lloyds savings account was paying me all of 1.1% on the admittedly fairly meagre “rainy day” pot I have put aside for emergencies.

It is better than nothing of course, and a big improvement on the 0.1% I had been getting since the pandemic hit. But it still seems a miserably poor return to offer a loyal (or more accurately lazy) customer of nearly 40 years standing when the bank can lend out at 5% or 6%.

Stingy bank savings rates remain a scandal that undermines what should be a laudable and socially beneficial ambition — building up a cushion that can act as a buffer between security and financial disaster when the unexpected happens.

As my university economics tutor used to say, most of us are only ever two or three pieces of really bad luck away from homelessness. And that applies now more than ever. So it is to be welcomed that the Financial Conduct Authority has today tightened the squeeze on the banks to make sure they are properly passing on interest rate rises to savers.

The 14-point action plan it has revealed will increase transparency and make it easier for customers to work out when they are being ripped off. But it must be only a start.

The FCA says it will take “robust action” against banks and building societies providing the lowest rates if they cannot justify them. It will also use the new Consumer Duty rules to require the stingier players to provide “fair value assessments” by the end of next month.

Let’s hope the FCA sticks to its guns and kick-starts a revival of the savings habit.

Sign up to read this article
Read news from 100’s of titles, curated specifically for you.
Already a member? Sign in here
Related Stories
Top stories on inkl right now
One subscription that gives you access to news from hundreds of sites
Already a member? Sign in here
Our Picks
Fourteen days free
Download the app
One app. One membership.
100+ trusted global sources.