Britain’s biggest banks are continuing to lag behind on savings rates, despite interventions from the Treasury and the city regulator.

Santander, Barclays, HSBC, Lloyds and NatWest all pay less than 2pc on balances of £10,000 in their basic savings accounts.

This is less than 80pc of the 364 products on the market, analysis from comparison website Moneyfacts showed.

The average interest paid by the big banks on these accounts stands at 1.69pc – the average across all accounts stood at 3.12pc, an increase of 85pc.

Easy-access Isa rates were even less competitive. While NatWest and HSBC require that customers hold a current account with them to have a cash Isa, for the remaining banks’ cash Isas, the average rate is just 1.58pc.

This is less than half the current average rate on cash Isas of 3.31pc.

James Hyde, of Moneyfacts, said: “Currently, a saver who puts £10,000 in an easy access Isa offered by a big bank would lose out on £169 in interest each year compared to the market average rate paid.”

Anna Bowes, of comparison website Savings Champion, said: “It’s so frustrating that the high street banks continue to offer some of the lowest savings rates on the market, even after the FCA introduced its 14-point plan almost a year ago, which was supposed to see them improve how they treat their customers.

“One of the problems is that the banks don’t need to offer better rates in order to attract cash,” she said.

It comes despite warnings last summer from Chancellor Jeremy Hunt that the banks were taking “too long” to pass on rate increases and a rebuke from the Financial Conduct Authority (FCA).

In March, four of the big banks: Santander, Barclays, Lloyds Banking Group and NatWest, were questioned by the Treasury Select Committee about why rates had taken so long to rise.

In letters responding to the chairman of the committee, Harriett Baldwin, the banks said that relying on the Bank Rate to determine how much they would pay savers did “not necessarily reflect the full range of retail banking dynamics”.

Following 14 consecutive hikes in the Bank Rate, starting in December 2021, the Bank of England set the interest rate at 5.25pc last August.

This coincided with a peak in savings rates when government-owned National Savings & Investments (NS&I) launched a 6.2pc one-year fix.

Although the rates have dropped slightly across the board since then, the average easy access accounts have improved.

Whereas the average account offered 2.94pc on August 31 last year, savers could achieve an average of 3.12pc as of Wednesday.

A spokesman from the Financial Conduct Authority said: “We are continuing to look closely at the value firms provide to their customers.

“Since we launched our cash savings action plan last year, we have seen a more competitive savings market. The latest data shows there were 171 easy-access products offering 4pc interest or more.”

A spokesman from industry body UK Finance said that the banks were committed to providing for customers and that savings rates have increased.

The spokesman said: There is a wide range of savings products available across a competitive market. Rates are typically lower for easy access accounts and higher if customers are able to put their savings into a fixed rate account.”

A spokesman for Lloyds said: “The savings market is competitive, and we offer a range of products and access with rates that reflect the value of the broader range of services we provide.”

A Barclays spokesman said that the bank offered value across a range of savings products, in a “very competitive market”. 

A HSBC spokesman said: “We are firmly focused on supporting customers in the current environment and provide overall value on our savings accounts that goes beyond interest rates to provide flexibility, convenience, simplicity and organisational and financial stability for customers who want to save with a trusted high street brand.” 

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