High Street banks are still offering customers lower savings rates than challenger banks and building societies, according to research by Which?.

The Bank of England raised the base rate seven times between October 2022 and October 2023 from 2.25 per cent to 5.25 per cent. But the consumer champion found that the average easy-access rate offered by High Street banks only grew by 1.56 percentage points over the same period, rising from 0.42 per cent to 1.98 per cent.

In contrast, Which? found that building societies raised their easy-access rates on average from 0.96 per cent to 2.93 per cent, while challenger banks increased their rates from an average of one per cent to 3.31 per cent.

The research comes a few months after the FCA’s Consumer Duty rules came into effect meaning that firms must regularly review their products to demonstrate they offer fair value.

The consumer champion found that that most High Street banks have failed to make substantial improvements to easy access rates since the FCA set out a 14-point action plan for cash savings in July.

Which? added that High Street banks have shown more improvement across their one-year fixed rate deals compared to building societies and challenger banks. The average rate offered by High Street banks on these types of accounts over the past 12 months has increased by 3.45 percentage points, compared to challenger banks, which offer an average increase of 2.61 percentage points and building societies offering an average increase of 2.72 percentage points.

“Our research shows that despite Which?, MPs and the regulator repeatedly raising the alarm over meagre savings rates, big banks still aren’t getting the memo,” said Jenny Ross, editor of Which? Money. “It’s crucial that anyone fortunate enough to be able to put money aside during a cost-of-living crisis is getting the best returns possible.”

She added: “Firms must act urgently to improve their rates or face tough action from the regulator by the end of the year.”

Last month, Which? found that challenger banks beat High Street banks for both savings and current accounts.

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