People who get ‘poor’ bank rates should ‘shop around’, Cabinet minister says
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People who feel they are getting “very poor” interest on their savings should “shop around” and find a bank that will pay “a better rate”, the Work and Pensions Secretary has said.
Mel Stride said some of the “stickiness” comes because there is “often inertia” and that it is “relatively easy to change and switch accounts”.
His comments come as high street banks have in recent months been accused of not passing on rising interest rates to savers, while at the same time increasing mortgage rates sharply, costing families potentially hundreds of pounds this year.
The Treasury Select Committee, an influential group of MPs, wrote to the Financial Conduct Authority to demand action at the end of March, after grilling the chief executives of Britain’s four biggest banks.
Last week, the Bank of England raised interest rates for a 12th consecutive time, going up to 4.5% from 4.25% but consumer group Which? found some people have been languishing on deals as low as 0.1% in recent months.
Asked what the Government should do, Mr Stride, who chaired the Treasury Select Committee for three years, told Kay Burley on Sky News: “I think, broadly speaking, the banking and financial services sector is a relatively efficient and highly competitive marketplace.
“So you would expect as one particular bank starts changing rates others to follow, but it is sticky, and of course, Government, the Business Department and Treasury and others are often involved in discussions with banks about exactly those kinds of things.”
He stressed it is a “free market” before adding: “My advice generally would be if you feel you’re getting a very poor rate with one particular institution is (to) shop around and find one that will pay a better rate, and there are those out there.”
Mr Stride said some of “the stickiness comes because there is often inertia”.
He said: “It’s relatively easy to change and switch accounts and it’s worth shopping around. And so my advice to anybody of whatever age, actually, is if there are better deals out there with similar institutions on a similar basis, then move your account.”
