Banks fail to pass on rate rise to savers

Savers hoping for a handout from Britain’s major lenders have been left disappointed after only one passed on the Bank of England’s rate rise at the beginning of the month in full, savings experts said on Tuesday.

The Bank raised interest rates to a nine-year high of 0.75% on August 2 but, nearly four weeks on, only Santander has upped the rate by 0.25% on its instant-access savings account, according to personal finance data firm Moneyfacts.

Even then, Santander’s savings rate remains well below the Bank rate at 0.5%.

Other major lenders have passed on much lower increases, with Barclays increasing its instant-access savings rate by just 0.05% and HSBC by 0.1%.

Lloyds has also failed to increase in line with the rate rise except in its future saver children’s accounts. A Moneyfacts spokeswoman said better savings rates were to be found among challenger banks on the hunt for deposits, many of whom have passed on the rate rise in full. “The major banks don’t need the money, so they don’t need to entice savers.”

The extra margin on savings accounts will fatten bank profits but will also reinforce calls for a minimum savings rate across all banks after the Financial Conduct Authority proposed the idea in July. This would allow customers to compare rates more easily and encourage switching.