Banking giants, Lloyds and HSBC have announced rate hikes on a number of savings deals on the same day their bosses faced another grilling over their treatment of savers.
Lloyds and Halifax (part of Lloyds Banking Group) have announced they are upping rates across their fixed rate bond and Isa products by 0.5 percentage points.
Both banks also announced boosts to a number of variable rates, including easy-access accounts.
Meanwhile, HSBC is also making rate changes to its fixed rate savers and Isa accounts, with increases of up to 0.65 percentage points.
Banking giants, Lloyds and HSBC have announced rate hikes on a number of savings deals on the same day their bosses faced questioning over their treatment of savers.
Coincidently, also today, bosses from these banks were summoned by the Financial Conduct Authority to face questions from the regulator about their low interest rates on savings accounts, pumping up rates on mortgages and whether they are treating customers fairly.
Despite a new era of higher interest rates that has seen the Bank of England’s base rate pushed up from 0.1 per cent to 5 per cent in the space of 18 months, some of the larger banks continue to offer savings accounts that pay 1 per cent or less.
At the end of this month, the FCA will introduce the consumer duty, a requirement for firms to always act in good faith and deliver fair value for their customers.
Earlier this week, the Treasury Committee wrote to the big four high-street banks and to the FCA on easy access savings rates.
The regulator was asked by a Treasury Committee about what enforcement action can be taken if firms do not comply with the consumer duty.
The MPs also asked how the FCA will judge whether banks are making enough effort to encourage savers to switch to higher rates.
Harriett Baldwin MP, and chair of the Treasury Committee, said: ‘As a Committee, we’ve been questioning the high street banks on their poor savings rates all year, and it’s clear that savers have been getting a raw deal for too long.
‘While it’s welcome to hear the banks recognise further action is required, it’s time to see an acceleration in progress.
‘We will be following developments closely and will be particularly alert to any apparent foot dragging.’
Are these rate hikes enough?
The bosses of HSBC and Lloyds Banking Group (which includes Halifax) may well be hoping that today’s changes may act as a convenient distraction.
Savers will likely see value for money both from Halifax’s and Lloyds Bank’s fixed rate cash Isas – both of which will soon be table topping.
Lloyds’ one-year fixed rate cash Isa will pay 5.45 per cent, while its two-year cash Isa will pay 5.5 per cent, from 14 July.
Halifax’s will pay slightly less – 5.3 per cent for the one-year cash Isa and 5.35 per cent for the two year cash Isa, also starting from 14 July.
Ar present, the best one-year and two-year fixed rate cash Isa deals are offered by Coventry Building Society paying 5.3 per cent and 5.4 per cent respectively.
The average one-year cash Isa pays 4.49 per cent , according to Moneyfacts, which Lloyds and Halifax both comfortably beat.
However, in terms of the fixed rate taxable accounts, neither Lloyds nor Halifax look so attracitve, given they offer the exact same rates as their fixed cash Isa deals.
The best taxable one-year fixed rate deal pays 6.01 per cent and the best two-year fix pays 5.95 per cent.
– Check out the best fixed rate deals here.
Despite the Bank of England raising the base rate for the 13th consecutive time since 2021 to 5 per cent, some of the big banks are still offering saving rates that pay below 1 per cent.
Halifax is also hiking the rates on its Isa Reward Bonus Saver and Reward Bous Saver by 0.8 percentgaeg points, from 3.4 per cent to 4.2 per cent. This is available to all those with a Halifax Reward current account.
Club Lloyds customers will see the rate on the Club Lloyds Advanatage Saver and Advantage Isa rise by 0.8 percentage points, from 3.2 per cent to 4 per cent.
However, while some rates now look competitve. The changes made by Lloyds and Halifax with reagrds to some of their variable rate deals may be deemed insufficient by savers and regulators alike.
From 20 July, Loyds and Halifax’s standard easy-access deals will rise by just 0.2 percentgae points.
Halifax’s Everday Saver and Isa Saver customers will soon get 1.15 per cent on balances up to £10k and 1.25 per cent up to £50k.
Those who have their money parked in Lloyds Babk’s Easy Saver or Cash Isa Saver will see the rate go from 0.9 per cent to 1.1 per cent on balances uo to £30k.
To put that in perspective the average easy-access rate across the entire market is 2.49 per cent, while the best easy-access deals pay 4.35 per cent.
What about HSBC?
HSBC’S rate changes are effective from tomrrow. The 0.65 percentage point increase on its fixed rate accounts will see its one-year deal rise to 5.05 per cent and its two-year deal to 5.1 per cent.
Although these are slightly above the average market rate – 4.8 per cent according to Moneyfacts – they fall well short of the best buy deals.
HSBC has also added 0.2 percentage points to its Premier Loyalty Isa, which from tomorrow will pay 3.2 per cent, as well as its Advance Loyalty Isa to 2.7 per cent.
These are essentially easy-access Isas, both of which fall well short of the best easy-access cash Isa deals on the market that pay above 4 per cent.
One notable area that HSBC is improving, where savers may see good value for money is its popular 4 per cent Online Bonus Saver.
The balance on which the 4 per cent rate is applied is expanding from £10k to £50k potentially adding £680 in annual interest to account holders who maximise this. Anything over £50,000, will earn 2.3 per cent.
The expansion of the 4 per cent rate will mean someone holding £50,000 in this account could earn £2,000 of interest over 12 months – if the rate remains the same.
One drawback is that the 4 per cent rate only applies for any month in which no withdrawals are made.
During a month in which a withdrawal is made or the account is closed, savers only earn 1.75 per cent.
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