UK banks say data rules stop them telling savers about better deals

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UK banks have defended the interest rates they offer savers in a meeting with the financial watchdog and said data-protection rules are stopping them from letting certain customers know about better deals.

The Financial Conduct Authority hosted a summit with lenders including the big four banks on Thursday, in response to mounting concerns about low interest being earned on their savings accounts.

Banks have been accused of profiteering as the average two-year savings account offers a rate of 4.84 per cent, according to Moneyfacts, while the average two-year fixed mortgage charges 6.54 per cent.

The FCA discussed with banks the need to communicate more clearly with customers about savings rates changes and options, according to two people familiar with the talks.

“What we’ve been asked to do is give more of a steer at the time of base rate changes as to what we plan to do,” said one person with knowledge of the meeting.

However, bankers in the discussion said that GDPR data-protection rules have made it difficult for lenders to contact customers about savings deals when they have opted out of receiving marketing material.

“We can’t look at [individual customers] and say ‘can I tell you about this rate’ if they’ve opted out of marketing, because of GDPR rules,” said one senior banker in the meeting. “We think this is nuts because we’re trying, we’re [promoting deals] on websites, apps, branches.”

Another banker said: “They want banks to make more of an effort . . . around how you communicate with customers and particularly those who are in instant access savings accounts so they are aware of other options available to them.

“There are lots of things around GDPR and marketing permissions, which at the moment might restrict us from being able to contact specific customers. We’re happy to do it, but you have to help us make sure that by doing it we’re not breaking other rules.”

Lloyds Banking Group, HSBC, NatWest and Barclays were among the banks at the meeting. Senior politicians have accused UK banks of not passing on the benefits of higher interest rates to customers. The Bank of England base rate is currently 5 per cent.

One senior banker at the meeting said they also debated whether lenders should immediately pass on interest rate rises to savers.

The FCA said in a statement after the meeting on Thursday that it wanted faster progress on improving savings rates. Two people familiar with the meeting said the FCA made it clear during the talks that it would not become a “price setter”.

Bankers also made the argument that lenders need to have different savings rates depending on their business model, one person said. A lender that relies heavily on deposits to fund mortgages might use higher rates to attract customers, for example.

“Banks have to manage both sides of the balance sheet and different organisations have different funding and liquidity needs — that was in the discussion, it was a good discussion,” the banker said. “But I think there’s a lot of political pressure and noise around banks and profits and rates and instant access accounts.”

The FCA said after the meeting: “Many people are feeling the squeeze from rising interest rates and prices, so it is more critical than ever that they are offered fair and competitive saving rates.”