Banks have claimed they cannot alert all of their customers to their best saving deals because of privacy rules.
Firms including Barclays and HSBC said they were not always able to tell customers about their best deals because of regulation that blocks them from sending out new marketing material.
Nikhil Rathi, the head of the Financial Conduct Authority, writing to MPs on the Treasury Committee on Tuesday, said: “Some firms have raised concerns that data law requirements are a barrier to contacting customers who have opted out of receiving marketing material, and we are working closely with the [Information Commissioner’s Office] to clarify rapidly any outstanding issues.”
Matt Hammerstein, the head of Barclays, said there were “practical constraints” on sharing personal guidance to savers. HSBC’s Ian Stuart said the bank was “engaging with the FCA and the ICO” to improve its engagement.
But regulators have rejected the claims. In a joint letter to the banking trade body UK Finance, the FCA and the ICO said banks can provide regulatory communications to all their savings customers that “provide factual information about interest rates and terms of other available savings products, and what their options are for moving to another product”, even if they had “opted out” of direct marketing.
GDPR laws do not stop banks from sending these messages, the watchdogs said, but added that the banks must still ensure they comply with data protection requirements.
GDPR rules were introduced in 2018 across the European Union and were retained in British law. However, the UK has independence to keep its framework under review.
It comes after banks were hauled into a meeting with the Chancellor to address concerns savings deals were not improving as fast as rapidly-rising mortgage rates.
Harriett Baldwin, the Conservative MP for West Worcestershire and head of the Treasury Committee, said: “If the high-street banks continue to pay poor savings rates on their instant access accounts, they should make sure their customers know that better rates are available.
“Given that the Government, regulator and Governor of the Bank of England agree with the Committee that action is required, the time for weak excuses is over.”
Ms Baldwin added that the Treasury would continue to monitor banks’ saving rates closely.
While the bank rate has increased from 0.25pc at the start of 2022 to 5pc, the average easy access saving account still pays just 2.62pc, according to the analyst Moneyfacts. Meanwhile, the average two-year mortgage deal stands at a rate of 6.78pc.
Last week Andrew Bailey, the Governor of the Bank of England, joined calls for high street banks to pass on higher rates to savers. “It’s important that rates get passed through, it’s also important that we have competition in the banking system, which encourages banks to compete on savings rates,” he said.