UK banks ‘not passing on higher interest rates to savers to boost own profits’

BRITISH banks have been resisting passing on higher interest rates to savers — to boost their own profits, MPs were told yesterday.

The admission came in a letter from the boss of the Financial Conduct Authority.

Nikhil Rathi said the regulator had noticed some banks have a “material time lag” in reflecting higher interest rates in savings accounts.

This means loyal savers have been denied the financial benefits of the Bank of England increasing interest rates.

Yet people with home loans have been swiftly hit by higher fees.

The average saving rate is now 2 per cent while the average fixed two-year mortgage is 5 per cent, according to Moneyfacts.

Barclays, HSBC, Lloyds Banking Group and Natwest Group appeared in front of the Treasury Committee last month to defend offering customers interest rates of less than 1.3 per cent on easy-access savings accounts — despite the Bank of England’s base rate rising to 4 per cent.

Harriett Baldwin, who chairs the committee, said: “The regulator has now given us official confirmation that the UK’s biggest banks are profiting from interest rate rises and that loyal savers are being increasingly harmed.”

Markets are betting that high inflation figures will mean the Bank will have to hike rates to 5 per cent.

That will heap extra costs on mortgage-holders and credit card users but mean extra profits for banks.

Britain’s four biggest banks recently revealed annual profits of £37billion — the highest since 2008.

And the Government is reducing a surcharge on bank profits from April — handing the lenders £150billion over the next six years for sitting on cash.

SE recently revealed that banks are charging customers £15billion a year in interest fees, late payment penalties and overdraft charges.

Despite 11 consecutive Bank of England rate rises, mortgage customers are more likely to stay with their bank than switch, the FCA found.

‘Roo has food for thought

PEOPLE are cutting back on their takeaways because of the cost-of-living crisis, according to Deliveroo.

Its order numbers globally dipped 9 per cent to 72.1million over the past three months.

However, restaurants are charging more for food — meaning Deliveroo still enjoyed 7 per cent sales growth.

In the UK, order numbers fell 3 per cent to 39.6million takeaways, but sales were 12 per cent higher.

CEO Will Shu said trading was “resilient, particularly in the context of inflationary pressures”.

Rival group JUST EAT also posted a drop in orders.

Deliveroo shares have slumped by almost three- quarters since its £7.6billion stock market listing in 2021.

Bags’ berry good show

THE cost-of-living crisis hasn’t put fashion fans off pricey designer handbags — with Mulberry posting strong sales in the UK.

Shares in Mulberry rose by 8 per cent yesterday to 243p after the leather goods luxury brand said that sales were tracking ahead of last year.

It has recently launched a tie-up with bunny cartoon Miffy, in carbon-neutral leather, appealing to younger, environmentally conscious shoppers.

Mike Ashley’s Frasers Group built up a 37 per cent stake in Mulberry two years ago but has resisted making a takeover offer for the brand.

The fashion firm has lost two-thirds of its value in the past five years.

Fund fail compo is 77p in a £

ABOUT 300,000 investors who lost out when star stock-picker Neil Woodford’s fund collapsed are in line to share £235million compensation.

The Financial Conduct Authority said Woodford Equity Income Fund investors will get back around 77p in the pound.

The FCA earlier found that Link Fund Solutions, the administrator, made “critical mistakes” and failed to properly manage liquidity — so investors were trapped when the fund was suspended in 2019.

At its peak the fund was worth more than £10billion, but it made a string of bad bets, including on Purplebricks and Provident Financial.

Its strategy of investing big stakes in private unlisted companies also meant it struggled to raise cash when things soured.