“Our 'off sale' products now represent less than 3 per cent of our savings balances, held in only two products – the Help to Buy Isa (which the government took off sale) and currency deposits (a product in active run-off),” the CEO wrote.
Commenting on the responses, Harriett Baldwin, chair of the Treasury committee, 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.”
Regulator’s response
Earlier this month, the committee also wrote to the FCA and asked about the incoming consumer duty - a requirement for firms to always act in good faith and deliver ‘fair value’ for their customers.
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.
Following this, the FCA said it held a “constructive meeting” with lenders which builds on work it has been doing over several months to monitor the savings markets.
In its response today (July 18), the regulator confirmed that it expects firms to ensure customers are “informed of available rates across their product set and how they may benefit from switching”.
FCA chief executive Nikhil Rathi also said the regulator recognises that some firms will have other constraints.
For example, those that are close to the £25bn retail deposit threshold that would trigger the ring-fencing regime may choose to manage deposit rates so as not to breach the threshold.
“The government has indicated its intention to consult on raising this threshold to £35bn, which could have some potentially beneficial competition effects, which would need to be balanced against potential financial stability considerations,” he wrote.
“Our ongoing review will consider how well the savings market as a whole is supporting customers and we will set out our findings and next steps at the end of July.”
He explained that firms will need to go further than just notifying a customer at product maturity in order to be compliant with the requirements of the duty.
“This includes identifying groups of customers who may be better served by a higher rate product and considering what additional steps they can take to support these customers in switching where appropriate.”
Once the duty is in force, he said the FCA will continue to use data and insights to identify outliers and poor practice, intervening where firms fail to deliver good outcomes.
