Shadow Treasury financial secretary Chris Leslie has hit out at mortgage lenders for “sneaky” standard variable rate rises and called on them to do more to warn customers of potential rate rises.
Speaking at a fringe meeting on debt at the Labour autumn conference in Manchester yesterday, Leslie said it is “amazing” that rates are going up when funding is so cheap.
In August, Santander hiked its SVR by 0.50% and earlier this year Halifax, Clydesdale and Yorkshire and the Co-operative Bank increased their rates. Which? estimates the rises will cost consumers more than £300m.
Leslie said: “Some of these decisions on SVRs are quite sneaky. I am very worried because there is the Funding for Lending scheme reducing their costs and they can even go to the European Central Bank to get great chunks of free money but, amazingly, customers’ costs are going up.
“I am worried we have come out of an era where the taxpayer was bearing the burden of recapitalisation of the banking system to an era where the customer will bear the burden.
“One area that won’t bear the burden is what they call compensation. If you look at how much of bank’s revenues go towards management remuneration it is vast, more than 50%. It is very rarely squeezed but you can be sure the banks will say ‘we have to charge these fees to cover the costs of retail’ or ‘we need to charge for in-credit banking’. You watch them come after some of these areas but they will not go after the compensation and it is one reason we need transparency.”
Leslie says he is concerned about what will happen to mortgage holders when the Bank of England base rate begins to rise and interest rates increase.
He said: “What are we doing now to prepare people? It is no good telling people about various scenarios when they took out a loan 12 years ago. Lenders must remind people year on year. They should point out what could happen to them with interest rates and be aware of situations. So a mortgage rate forewarning is something we have been floating.”