Banks could be forced to boost interest rates as Brits lose £364 on savings – how to find the best accounts

BANKS could be forced to boost interest rates on savings as households miss out on £364 a year, on average.

New savers are being offered more attractive rates leaving existing customers earning less, according to the Financial Conduct Authority (FCA).

It comes as Coventry Building Society revealed that a whopping £256 billion of household savings are earning no interest at all.

This works out at an average of £364 for every household in the UK, the bank said.

This is because the Bank of England base rate at its highest in 14 years - it currently stands at 4.25%.

Savers could get an extra £10billion worth of interest if they moved their money from a zero interest account and put into a regular saver earning 4%.

High-street banks use the BoE's base rate to work out the interest rates it offers to customers.

An increase pushes up borrowing costs, including on mortgages.

But savers could benefit from better rates on their nest egg - if the increase is passed on.

Writing to the Treasury Committee, Nikhil Rathi, chief executive of the FCA said loyalty suffers are missing out more now than ever before.

He said: “We expect that the harm from this practice - and the loyalty penalty faced by longstanding customers - will have increased as the base rate has risen.”

Mr Rathi said that from July 31, when setting rates, banks will need to provide "fair value to all groups of savers."

He added: “We have made clear that firms should be able to justify and explain the rationale for the speed and degree to which they make changes to their various savings rates.”

The regulator monitors the speed and extent to which banks pass on increases in the base rate to their savings products.