Banks warned as they hike cost of mortgages but slash savings rates 

Watchdog warns banks to treat their customers fairly as they hike the cost of mortgages but slash savings rates

Interim FCA boss Chris Woolard said he is looking into concerns that banks are not passing on the benefits of lower interest rates

The boss of the City watchdog has warned banks to treat their customers fairly as it emerged they have hiked the cost of mortgages while slashing savings rates.

The Bank of England has cut official interest rates from 0.75 per cent to a record low of just 0.1 per cent to reduce the cost of borrowing for struggling households and businesses during the Covid-19 crisis.

But banks have so far defied pressure to cut mortgage rates. In fact, data collected by the Bank shows interest rates offered on variable-rate mortgages, which shadow the official rate, have increased.

Chris Woolard, interim chief executive of the Financial Conduct Authority, echoing Bank of England governor Andrew Bailey, warned banks who increased rates would have to explain themselves.

A spokesman from banking trade body UK Finance said: ‘Pricing is a commercial decision for individual firms.’