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Finance watchdog warns banks they must treat customers fairly

The financial watchdog is stepping up the pressure on banks and other lenders to pass on higher interest rates to savers by insisting that data protection rules cannot be used as an excuse not to tell consumers of better deals.

The Financial Conduct Authority (FCA) and Information Commissioner’s Office warned banks and building societies that the rules do not prevent them from informing customers about better rates available.

The advice, in a letter to industry lobby groups UK Finance and the Building Societies Association, came after a summit earlier this month when the financial regulator put lenders on notice to speed up the process of passing on savings rates.

FILE PHOTO: RBS CEO Alison Rose attends the annual CBI Conference in London, Britain November 18, 2019. REUTERS/Simon Dawson/File Photo
Nat West chief executive Alison Rose defended the bank over passing on rate rises to savers (Photo: Simon Dawson/Reuters)

The latest warning comes as banks sought to defend themselves against criticism they are profiteering by not passing interest rate rises to savers.

The parliamentary Treasury Select Committee has accused banks of not offering good value.

Harriett Baldwin, the committee chair, 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. The time for weak excuses is over.”

Alison Rose, chief executive of NatWest, told the MPs it had passed on more than 60 per cent of higher interest rates to its instant-access savings accounts in the first half of the year.

Nikhil Rathi, chief executive officer of London Stock Exchange Plc, addresses attendees at the Innovate Finance Global Summit in the City of London, U.K., on Monday, April 29, 2019. Bank of England Governor Mark Carney has defended pre-referendum predictions that a vote to leave would lead to slower growth, a drop in the pound and faster inflation -- all of which transpired. Photographer: Jason Alden/Bloomberg via Getty Images
Nikhil Rathi, chief executive of the Financial Conduct Authority, said it would take ‘enforcement action’ if firms did not ‘consistently provide good outcomes’ (Photo: Jason Alden/Bloomberg)

“We offer our customers a range of products and rates in what is a very competitive market, and we amend the price of products on an ongoing basis to reflect market conditions and our liquidity needs,” she added.

“We have been working for some time on products that promote good savings habits… we do not discriminate between new and existing customers.”

Charlie Nunn, Lloyds boss, said the bank had made “a number of significant enhancements to support our customers… We will continuously improve our products, services and journeys beyond July 2023.”

Nikhil Rathi, the FCA’s chief executive, said: “We welcome that many firms have acted in advance of the consumer duty to simplify their product ranges and equalise rates.

“We will monitor firms’ actions to comply with the duty and take appropriate steps, including enforcement action if appropriate, if we find they are consistently not providing good outcomes for their customers.”

The FCA expects firms to have “a strategy to ensure customers are adequately informed of available rates across their product set and how they may benefit from switching”.

It added: “We have been closely monitoring firms’ interest rate decisions and have regularly raised the issue in our supervisory discussions.”

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