Here we reveal the size of the gap between the big banks and the rest of the market, and explain what you can do to boost your savings.
Banks put on notice
The FCA stated that firms found to be offering the lowest rates would be required to justify them, warning that they would face action if unable to do so.
Find out more:Big names drag their feet
Between October 2022 and October 2023, the BoE hiked the base rate seven times, raising it by three percentage points from 2.25% to 5.25%.
But our analysis shows that over the same period, the average easy-access rate offered by the big banks only increased by half this amount (+1.56pp), taking it from 0.42% to 1.98%.
By comparison, building societies raised rates by an average of 1.98 percentage points (from 0.96% to 2.93%), while challenger banks raised their rates by 2.31 percentage points (1% to 3.31%).
And despite the FCA’s warning in July, many of the UK’s leading banks have failed to make substantial improvements to their rates in the months since.
Between July and October, the average easy-access rate across the whole market went from 2.41% to 3.16% (+0.75pp), but the only big names to improve their rates by more than this amount over the same period were Barclays (+0.8pp) and Ulster Bank (+4.1pp).
e rate: its Loyalty Saver offers an impressive 5.2% (for balances of £5,000 and above). Meanwhile, Barclays, Halifax, HSBC, Lloyds and NatWest all pay 2% or less on their easy-access accounts.Easy access rates across most traditional banks have shown little improvement
Fixed rates see bigger increases
Looking at one-year fixed accounts, the major banks have shown more improvement over the past 12 months (up 3.45pp on average) than either challenger banks (+2.61pp) or building societies (+2.72pp).
, with none of the big banks appearing in the top half of the table.Despite some competitive accounts being withdrawn, the best one-year fixed accounts on the market still pay around 6%. Find out more:Watchdog ready to bite
When we submitted our findings to the FCA, a spokesperson told us: ‘The level of base rate being passed through to saving accounts, including easy-access savings, has been increasing – but this varies between firms.
‘We have since ordered nine firms to provide us with their assessments of what value their savings products offer, and are currently reviewing them.’
The regulator declined to name the firms in question or explain what action (if any) they may face, but promised an update later this year.
Have savings rates reached their peak?
With the Bank of England finally pausing its hikes in the base rate in September, and again in November, analysts think we may have reached the top of the savings market.
Usually speaking, the longer you’re willing to lock your money away, the more interest you can expect to earn. But that’s not the case now: the best two, three and five-year fixed accounts all pay less than the best one-year account, indicating that providers expect rates to fall before too long and don’t want to commit to paying higher rates for an extended period.
Mark Hicks, head of savings at Hargreaves Lansdown, recently warned: ‘The days of 6% rates on one-year fixed products are numbered. What started off as a trickle of withdrawals has now turned into a trend, with multiple banks and building societies recently removing products.
He added: ‘This could be the last chance to fix before rates start to move lower.’
How to boost your savings
Minimise your tax bill: Lock your money up:Don’t pay the loyalty penalty:Manage your money online, where possible:Watch out for withdrawal restrictions:undefinedsource https://www.which.co.uk/news/article/mind-the-gap-high-street-banks-still-shortchanging-savers-az7wd0w1MTOW