Banks and the FCA warn that consumers must be made aware of better deals.

The UK’s Financial Regulator and Information Watchdog will warn the banks that they can no longer hide behind data privacy rules if they do not alert savers about better deals.

According to sources familiar with the matter, under pressure to pass along the benefits of higher interest rates, banks informed the Financial Conduct Authority in a meeting held earlier this month they couldn’t tell certain savers of deals if the latter had chosen to opt out of marketing communication.

Two people with knowledge of the situation say that the FCA, along with the Information Commissioner’s Office, plan to send a dispute letter on Tuesday to UK Finance, a banking lobby group.

This letter will tell lenders they can still communicate with customers better savings rates and still comply with the General Data Protection Regulation.

One person with a close connection to the ICO said, “It’s unacceptable for banks not to support customers because of erroneous interpretations or misguided interpretations regarding data protection regulations.”

Banks are under fire for not increasing savings rates enough while mortgage costs keep rising. Andrew Bailey, Governor of the Bank of England last week, called on banks pass on higher rates for savers. Jeremy Hunt warned that lenders would face a crackdown if the rates on savings were not increased.

Persons familiar with the earlier meeting in the month stated that the FCA had explained to banks how they could contact their customers. They also noted that the “ball is now in [the banks] court on highlighting saving deals.”

The letter will provide additional guidance to banks on how to communicate with their customers about the best rates of savings.

Since December 2021 the Bank of England increased rates thirteen times in a row, pushing base rates up to 5%. Moneyfacts reported that on Monday the average rate for a fixed-rate mortgage of two years rose to 6.78 percent, compared with the average rate 5.12 percent on a savings product of two years. The average rate of easy access is 2.61 percent.

The MPs who want banks to do more for savers have expressed their skepticism over banks’ claims that they can’t contact customers due to GDPR rules. These regulations allow regulators the ability to fine companies up to 4% of global revenue if they don’t properly protect or use personal data.

Harriett BALDER, the chairwoman of the Treasury Committee of the Parliament, said last week that she wasn’t convinced by the banks citing GDPR regulations, calling it “a very implausible explanation”.

Rob Masson is the chief executive of DPO Centre, an independent data protection consultancy. He called the banks’ argument “rubbish” and said that the Privacy and Electronic Communications Regulations set the rules for electronic marketing and are separate but complementary to GDPR.

He said: “If they are using electronic marketing rules as an excuse to not communicate with their customers, then there is a case. You can’t send that advice by email, but there is no reason why they couldn’t send it via the postal service.” “That’s pretty thin ground they’re on.”

Nick Phillips of Edwin Coe’s intellectual property team, said that companies are not allowed send marketing messages to individuals without their consent. They can send system messages, such as alerting customers that their terms and conditions have changed. . . Messages should be neutral. “It’s a very difficult area of law that people get wrong a lot.”

Lloyds Banking Group is contacting 2.4mn customers in the next few weeks to see if they can switch to another savings product.

UK Finance stated: We are looking forward to any correspondence that the ICO may send us on this matter.” The FCA declined to comment.

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