Net closes in on banks not offering fair interest rates to savers as only 28% of rises passed on

Andrew Bailey endorsed the Financial Conduct Authority's scrutiny on savings rates, saying a failure to increase returns "raised a question about fairness to customers".

He was speaking after making the 14th consecutive rise in a row, which took the base rate to 5.25% in August.

NimbleFins' Best Savings Accounts Guide currently shows the best easy access account available is offering 4.63%.

The FCA set out a 14-point action plan on cash savings last month after a review found nine of the biggest savings providers only passed on 28% of the base rate on their easy access accounts.

Under the financial watchdog's new Consumer Duty rules, firms offering the lowest saving rates will be required to justify by the end of August how they offer fair value.

If they are unable to do so the FCA will take action.

Mr Bailey told a Q&A with i newspaper readers: "The Financial Conduct Authority announced it's taking action to ensure that customers get a fair deal and we support their work.

"There needs to be effective competition for deposits, which will be encouraged by the FCA's measures to improve transparency."

The FCA's review into interest rates found the top nine savings providers were better at passing on rises on notice and fixed term accounts, but still fell short with 51% of the base rate being passed on.

But with our best savings account guide showing the top fixed rate is at 6.05% the value of your money is still plunging as inflation is above that at 7.9%.

Mr Bailey said there were signs banks were beginning to pass on rate rises more quickly.

He said: "The latest numbers we have in June suggest that the pass-through of our June interest rate rise of 50 basis points has been pretty full actually.

"So that's a change because it certainly was not full as has been well covered. That was not the case previously."

August's 0.25% base rate hike added £24 a month onto tracker mortgages.

Despite the doom and gloom, the Bank says the Government is on track to meet its target to halve inflation - to 4.9% - by the end of the year.

This is largely down to falling international energy prices, which experts hope will see average household bills below £2,000 from October when the next price cap comes into force.

Food inflation is still high and the Bank doesn't see it falling below 10% this year.

It also doesn't expect to meet its 2% inflation target for two more years.

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