This push comes as these lenders face criticism for profiteering amidst growing mortgage costs and rising interest rates.

Senior representatives from Barclays, Lloyds Banking Group, NatWest, and HSBC convened with Sheldon Mills, the FCA’s executive director for Consumers and Competition. This meeting focused on growing concerns that the savings rates currently offered by these financial institutions lag significantly behind the increasing mortgage costs.

Under new consumer duty rules, effective from the end of July, the FCA will possess enhanced authority to act against banks failing to deliver “good outcomes” for their customers, which includes offering better savings rates.

A spokesperson from the FCA said: “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.”

The FCA expressed that it had been challenging firms for their slow decision-making, including the minor increases to their variable rate savings products in spite of escalating interest rates. Although the Bank of England increased the interest rates to 5% last month, prompting a spike in the pricing of mortgages, the average rate for a two-year savings account has only reached 4.79%. Many people are cautious about tying their funds for a fixed term during a cost-of-living crisis and rising prices, resulting in an average rate of an easy-access savings account of only 2.49%, according to Moneyfacts.

The FCA spokesperson added: “We want to see a competitive market with fair value retail banking products – and with banks helping consumers to access them. We discussed how our consumer duty will set a new standard for firms from the end of July, including on savings rates. We set out that expectation to bank and building society leaders in today’s meeting.

“They recognised that they needed to do more to help their consumers access the best rates. We too recognise there is a need for further guidance, and will continue our focus on this.”