Mind the gap: High street banks still shortchanging savers, Which? research finds

High street banks are continuing to offer meagre savings rates compared with rival challenger banks and building societies, Which? research has found. 

The research comes a few months after the Financial Conduct Authority put banks on notice and members of the Treasury Select Committee delivered a scathing verdict on savings rates offered by the biggest banks. 

Between October 2022 and October 2023, the BoE hiked the base rate seven times, raising it by 3 percentage points from 2.25 per cent to 5.25 per cent. 

However, Which? analysis shows that over the same period, the average easy-access rate offered by the big banks only grew by 1.56 percentage points, rising from 0.42 per cent to 1.98 per cent.

By comparison, building societies raised their easy-access rates by nearly 2 percentage points, on average (from 0.96% to 2.93%), while challenger banks made an increase of 2.31 percentage points (1% to 3.31%).

The consumer champion has found that most high street banks have failed to make substantial improvements to easy access rates since the FCA set out a 14-point action plan for cash savings in July. 

Between July and October the average rate across the market for easy access accounts went from 2.41 per cent to 3.16 per cent (+0.75 percentage points), but of the big names only Barclays (+0.8 percentage points) and Ulster Bank (+4.1 percentage points) improved their rates by more than this amount over the same period.

As of early November, Ulster Bank is also the only high street name to offer an above-average easy access rate: its Loyalty Saver offers an impressive 5.2 per cent on balances of £5,000 and over. Meanwhile, Lloyds (1.4%), Halifax (1.5%), Barclays (1.65%) and HSBC (1.98%) all pay less than 2% on their easy-access accounts.

High street banks have shown more improvement across their one-year fixed rate deals, compared to competitors. The average rate offered by the major banks on these types of accounts over the past 12 months has increased by 3.45 percentage points, compared to challenger banks (2.61 percentage points) or building societies (2.72 percentage points).

However, the rates themselves remain unimpressive. Barclays is the only big bank paying an above-average rate, and none (including Barclays) make it into the top half of deals on offer.

The FCA’s new Consumer Duty means firms must regularly review their products to demonstrate that they offer fair value – and those that fall short of this requirement should expect to face tough, prompt action from the regulator. 

Jenny Ross, Editor of Which? Money, said: 

“Our research shows that despite Which?, MPs and the regulator repeatedly raising the alarm over meagre savings rates, big banks still aren’t getting the memo. 

“It’s crucial that anyone fortunate enough to be able to put money aside during a cost of living crisis is getting the best returns possible. Once again, it’s challenger firms and building societies that lead the way. 

“Firms must act urgently to improve their rates or face tough action from the regulator by the end of the year.”


Notes to Editors 

  • All rates (unless otherwise stated) are correct as of 2 October 2023. 
  • Figures are based on analysis of Moneyfacts data covering the period from October 2022 to October 2023. Rates were recorded on the first day of each month and are based on an initial deposit of £10,000. Where a provider offered more than one account per category, we used the best rate. We excluded easy-access accounts with withdrawal restrictions and any accounts with opening restrictions.
  • High street banks in this analysis are: Allied Irish Bank, Bank of Ireland, Bank of Scotland, Barclays, Halifax, HSBC, Lloyds Bank, Santander, The Co-operative Bank and Ulster Bank
  • In April this year, Which? conducted a three-year analysis of savings rates on offer from high street banks, challenger firms and building societies, and found that the biggest names were short changing customers by potentially hundreds of pounds a year. 
  • Which? press release – High street banks shortchanging savers by hundreds of pounds a year with unjustifiably low savings rates, Which? deep dive analysis finds


Ways to boost your savings

  • Minimise your tax bill: For those close to exceeding their personal savings allowance (annual interest of £1,000 for basic-rate taxpayers and £5,000 for higher-rate taxpayers), cash Isas offer the chance to grow savings tax-free. If you won’t earn enough interest to incur a tax bill, then ordinary savings accounts offer better rates than cash Isas.
  • Lock your money up: Overall, fixed-rate deals offer better returns than easy-access accounts, so if you have built enough money into an easy-access rainy day fund, it could be time to open a new fixed deal. 
  • Don’t pay the loyalty penalty: Our research has continually shown that big banks are not offering market leading deals. To maximise returns, shop around and don’t be afraid to go with unfamiliar brands.

FCA: FCA sets out 14-point action plan on cash savings

About Which?

Which? is the UK’s consumer champion, here to make life simpler, fairer and safer for everyone. Our research gets to the heart of consumer issues, our advice is impartial, and our rigorous product tests lead to expert recommendations. We’re the independent consumer voice that influences politicians and lawmakers, investigates, holds businesses to account and makes change happen. As an organisation we’re not for profit and all for making consumers more powerful.

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