While we are all aware that interest rates have been, and continue to, move upwards, it seems that this is offering the financial community a chance to recoup some of their losses from elsewhere. There are reports in the press that some Banks have been increasing savings rates in line with base rate changes, but increasing loan rates by more than base rate changes.
So is this really a big deal?
While the recent interest rate rise of 0.25% was fully expected, and savers have benefited to the tune of 0.25%, some lenders such as Halifax, Standard Life and Nottingham Building Society have reported loan rate rises (for existing and new customers) ranging from 0.30% to 0.35%. While the difference looks fairly small, this will create additional profits in the millions of pounds for the financial industry.
There is some speculation that these types of abuses of the system may well be investigated by the regulators, who have been very vocal in their opinion that all areas of the banking community should be treated as stand-alone units, and there should be no cross subsidising of services.
Slowly but surely the banking community are being exposed for some of the sharp practices which they have been using of late, and the public backlash is growing. It looks as though the financial sector will take some time to settle down and adapt to recent and forthcoming changes, as well as the threat from the regulator and customers reclaiming bank charges.
In the meantime it seems that the consumer is suffering and there seems very little likelihood of any short term change in this attitude.