In the News

Financial Market Failure - Banks Under Pressure to Improve Savings Interest Rates

Geoff Riley

31st July 2023

The Financial Conduct Authority (FCA) have told the UK's High Street banks that they will adopt a more pro-active regulatory role as regards their savings rates. They've asserted that those banks with the lowest savings interest rates may face punitive action, in the hope that this spurs them into offering higher interest rates. As context, the FCA has found that the nine largest commercial banks in the UK have passed on just 28 per cent of base interest rate increases since the beginning of 2022.

Thirteen increases in interest rates by the Bank of England (perhaps one more to come?) and the gap between borrowing and savings rates has widened. In part this is an information problem - are banks doing enough to alert customers to when changing savings accounts might lead to better outcomes?

Geoff Riley

Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.

© 2002-2024 Tutor2u Limited. Company Reg no: 04489574. VAT reg no 816865400.