By Huw Jones
LONDON (Reuters) – Britain’s banks were slow to start passing on increases in central bank interest rates to savers and consumers should consider switching to another UK lender, the Financial Conduct Authority said on Monday.
Banks have been quick to pass on higher interest rates to their mortgage customers, but savers are also keen to get better returns after years of record low central bank interest rates.
“It was a slow start,” FCA Chief Executive Nikhil Rathi told parliament’s Treasury Select Committee.
“I would also encourage consumers to actively consider switching,” Rathi said.
FCA acting chair Richard Lloyd said data so far suggest that the pass through of higher rates to savers is not as bad as the watchdog might have feared.
Meanwhile, banks are also setting aside more provisions in case of a rise in souring mortgages as Britain heads for what the Bank of England has forecast is potentially a two-year recession.
The number of customers in arrears, however, is still the lowest since 2007, though banks should be proactive in helping their customers, Rathi said.
The financial system is going into the anticipated recession in a much more resilient position than during the global financial crisis over a decade ago, he added.
There were signs already, however, that some consumers were using buy-now-pay-later credit to pay for essential goods and that part of the credit market is being closely watched, Lloyd said.
The FCA has been criticised for being slow authorising firms, especially in the crypto sector, but Lloyd said there was a need to take time to stop harmful companies slipping through the net.
After boosting staff in authorisations, Rathi said the FCA’s caseload has been cut from 12,500 last year to 6,000 at present, and will fall further to roughly the watchdog’s service targets by March next year.
(Reporting by Huw Jones; editing by David Evans)