In its latest issue of INTEREST, the retail financial product data provider highlighted the lack of competition between the largest banks and the impact that branch closures have made on the local economies, communities, individual customers and the banks themselves.

The average savings rate offered by the Big Four UK banks between 2008 and 2022 was just 1.52%, despite the average rate of inflation in that period sitting at a considerably higher 2.71%.

Savings deals that even matched inflation were extremely rare for much of that period, because Barclays, Lloyds Banking Group, HSBC and NatWest took the opportunity offered by the Bank of England’s quantitative easing measures to pay their customers artificially low interest rates.

As late as April 2021, Barclays had nine open savings accounts, offering between them an average of 0.15%. Lloyds had 21 averaging 0.23%, HSBC had 25 averaging 0.24% and NatWest had 19 averaging 0.38%.

This means that across their combined total of 74 accounts, customers of the Big Four banks were seeing average returns of just 0.26% on their deposits even though inflation at that time was 1.5%. Which means, using Moneyfacts “Rules of Thumb”, saving rates should have been around 3.5%. Ten times more than they were paying. All this was done at the time they were closing branches and reducing services.

For too long these Big Four banks, between them, have paid their savers too little; charged their customers too much; closed branches; reduced services; mis-sold PPI; mis-sold interest rate swaps; de-banked customers; ruined local communities and damaged local businesses.

It isn’t as if the banks themselves benefited. By closing branches, they have lost contact with their customers, particularly the local businesses who used to go to them as a matter of course when they wanted to borrow, expand, move or buy new equipment or invest money.

INTEREST concluded: “The Bank of England and FCA must make sure this never happens again. The Big Four banks must be stopped from abusing their dominant position in the future.

“They must restore competition between them – starting with stopping any more bank closures and then restoring branches in unbanked areas. That is the price they must expect to pay for being a quadropoly.

“The Financial Conduct Authority (FCA), under its Consumer Duty Rules, is now able to wield a fairly large stick and should do so.”