UK banks claim data regulations prevent them from informing savers about more favorable offers

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UK banks have recently faced scrutiny over the interest rates offered to savers. In a meeting with the Financial Conduct Authority (FCA), banks defended their rates, citing data-protection rules as a hindrance to informing customers about better deals.

The FCA organized a summit with major banks, including the big four, to address concerns about low interest rates on savings accounts. According to Moneyfacts, the average two-year savings account offers a rate of 4.84 percent, while the average two-year fixed mortgage charges 6.54 percent.

During the meeting, the FCA emphasized the need for clearer communication with customers regarding changes and options related to savings rates. However, bankers highlighted challenges posed by GDPR data-protection rules, which prevent them from contacting customers who have opted out of receiving marketing material.

Lloyds Banking Group, HSBC, NatWest, and Barclays were among the banks present at the meeting. Politicians have accused UK banks of not passing on the benefits of higher interest rates to customers. The Bank of England’s base rate currently stands at 5 percent.

Some bankers further debated whether lenders should immediately pass on interest rate rises to savers. The FCA clarified that it would not become a “price setter” but urged for faster progress in improving savings rates.

The discussion also delved into the argument that different business models may necessitate different savings rates. For example, a lender heavily reliant on deposits to fund mortgages may offer higher rates to attract customers.

The FCA concluded by emphasizing the importance of fair and competitive saving rates, especially considering the financial pressures faced by many individuals due to rising interest rates and prices.