The Financial Conduct Authority is investigating banks and building societies that are punishing savers and not helping borrowers.
The Financial Conduct Authority (FCA) will probe lenders for reducing interest rates on savings accounts without reducing mortgage rates following the Bank of England Base Rate cut.
Banks and building societies including First Direct (part of HSBC) and Scottish Widows (part of Lloyds) leapt at the chance to cut interest on their most popular savings deals after the Base Rate was brought down to 0.25%.
[SPOTLIGHT]But even though they’ve been warned by Bank governor Mark Carney, they haven’t reduced borrowing costs for their mortgage customers.
The FCA will write to all mortgage providers to find out what changes have actually been made.
By not cutting borrowing rates, more money is effectively going into the banks’ pockets while savers suffer.
The culprits
Scottish Widows Bank has cut savings rates without reducing the Standard Variable Rate for mortgages. However, SVR will reportedly be reduced from 3.99% to 3.74% on October 1.
First Direct has reduced Interest rates on some savings accounts by between 0.1% and 0.39%, according to figures from Savings Champion. Its SVR remains at 3.69%.
Some building societies like West Bromwich have also cut rates for savers and not for borrowers. It has recently slashed savings returns by between between 0.15% and 0.2% but the last time it reduced its SVR was in August 2014.
Find out where you stand by heading over to The banks and building societies cutting savings rates by more than 0.25% and What’s my Standard Variable Rate?
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