Banks have passed on less than 30pc of interest rate rises to savers, the City watchdog has found as it threatened a crackdown on lenders. 

The Financial Conduct Authority (FCA) said nine of Britain’s biggest saving providers only passed through 28pc of interest rate rises to their easy access deposits between January 2022 to May 2023, despite boosting rates on mortgage products. 

The regulator added that the banks offering the lowest savings rates will be required to justify their positions by the end of August and if they are unable to do so, the FCA will take action.

The FCA’s review came amid concerns that banks are profiteering from rising interest rates.

Lenders have faced heavy criticism in recent months from politicians and campaigners for failing to raise rates for savers as fast as they have for mortgage products at a time when borrowers are struggling to repay their debts. 

Earlier this month, regulators at the FCA held talks with executives at Britain’s biggest banks and warned them that they must accelerate rate rises on savings products. 

On Monday, the FCA also said it will review the timing of banks’ savings rate changes each time the Bank of England changes its base rate and pledged to publish a league table every six months of lenders’ easy access savings rates, ranking lenders from best to worst.  

Sheldon Mills, head of consumers and competition at the FCA, said: “We want a competitive cash savings market that delivers better deals for savers, where interest rates are reviewed quickly following base rate changes and firms prompt savers to switch to accounts paying higher rates.