Nationwide, Santander, TSB and Virgin Money, which collectively account for a quarter of all UK personal current accounts, have responded to concerns expressed by the Treasury Committee about "measly savings rates" for British consumers.

Last month the Committee wrote to the 'scale challengers' to ask them what proportion of their interest rate rises are passed onto their savings customers, questioning why easy access savings rates appear to be much lower than the Bank of England’s (The Bank) current base rate.

The Bank's Monetary Policy Committee, which last month said that the pass-through of interest rate rises to savers was “unusually weak”, says that roughly 60 per cent of household deposits are currently held in instant access accounts.

The Committee added that when it first began its inquiry into retail banks in February, the 'big four' banks – Barclays, HSBC, Lloyds Banking Group, NatWest Group – offered between 0.5 and 0.65 per cent for easy access savings accounts. The banks have now upped their rates to between 0.7 and 1.35 per cent, with The Bank's interest rate currently at 4.5 per cent.

Santander said that its base rate is not the only factor it takes into account in its pricing decisions, adding that it has to “balance pricing against all [its] fixed and funding costs”.

Similarly, TSB and Virgin Money told the Committee that interest rates on retail savings products are determined by a range of factors, including consideration of operational and funding costs, capital and liquidity requirements.

Nationwide also said it needed to balance the interest of savers with its mortgage borrowers, particularly amidst the ongoing cost-of-living crisis.

But Harriet Baldwin MP, chair of the Treasury Committee said that the UK’s biggest banks need to “up their game” and encourage saving.

“While other products are available to those who shop around, the measly easy access rates on offer lead us to conclude that loyal customers are being squeezed to bolster bank profit margins,” said Baldwin. "We remain concerned that the loyalty penalty is especially prominent for elderly and vulnerable customers who may still rely on high street bank branches.”

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