UK watchdog urges consumers to switch to banks to save

The Financial Conduct Authority said on Monday that Britain's banks were slow to pass on increases in central bank interest rates to savers and consumers should consider switching to another UK lender.

Banks have been quick to pass on higher interest rates to their mortgage customers, but savers are keen to get better returns after years of record low central bank interest rates.

"I would encourage consumers to consider switching," Rathi said.

Richard Lloyd, the FCA acting chair, said that the pass through of higher rates to savers is not as bad as the watchdog might have feared.

Banks are setting aside more provisions in case of a rise in souring mortgages as Britain heads for what the Bank of England predicts will be a two-year recession.

Since 2007, the number of customers in arrears is still the lowest since 2007, though banks should be proactive in helping their customers, Rathi said.

He said that the financial system is going into the anticipated recession in a more resilient position than during the financial crisis over a decade ago.

There were signs that some consumers were using buy-now-later credit to pay for essential goods, and that part of the credit market is closely watched, Lloyd said.

Lloyd said that there was a need to take time to stop companies slipping through the net because of the slow authoring of firms by the FCA.

After boosting staff in authorisations, Rathi said that the FCA's caseload has been cut from 12,500 last year to 6,000 at present and will fall further to roughly the watchdog's service targets by March next year.