A committee of MPs has claimed that loyal bank customers are receiving "measly" rates of interest on their savings.
Banks are pursuing higher profit margins, which is why the trend, which disproportionately affects older and more vulnerable customers, exists, according to members of the Treasury Committee.
In comparison to the Bank of England base rate, instant access savings products have much lower rates.
The needs of borrowers and savers needed to be balanced, according to the banks.
The returns offered to their savings customers have been a point of contention for major banking executives for the past few months, according to committee members.
The four largest UK banks' CEOs—Lloyds, NatWest, HSBC, and Barclays—were interrogated in Parliament in February.
The four bank bosses, who were described as the highest-paid panel to appear before the committee in a while and who earned more than £10 million annually collectively, claimed that the discussion had been improperly focused on the interest rate offered on easy access savings accounts.
They claimed that regular saver deals provided market-leading interest rates and that instant access products frequently served as a "gateway" to deals with higher interest rates.
After the hearing, numerous letters were sent to those banks and the providers in the next tier. Their responses have just recently been released.
One of them contained a letter from Debbie Crosbie, chief executive of Nationwide, who stated that the building society needed to exercise caution, that it worked to help customers get a better deal, and that balance was necessary.
With regard to cost-of-living pressures, she said that involved balancing "the interests of savers with our mortgage borrowers.".
The providers' defense appears to have failed to impress the committee. It was noted that the four major High Street banks offered instant access savings rates ranging from 0 to 135 percent, compared to the 4 percent base rate set by the Bank of England.
The committee's chair, Harriett Baldwin, declared that the need for the biggest banks in the country to step up their game and promote saving is "clearer than ever.".
While there are other products available to those who look around, the pitiful easy access rates offered lead us to believe that devoted customers are being penalized in order to increase bank profit margins.
We continue to be concerned about the loyalty penalty, which is particularly severe for elderly and vulnerable customers who may still rely on High Street bank branches. ".
For the first time in at least 15 years, total household savings decreased year over year on Wednesday, according to data released by UK Finance, the industry trade group for the banking industry.
People dipped into their savings accounts to pay for larger bills and food purchases, which resulted in a 4% decline in the value of deposits in instant access accounts in March from £905 billion a year earlier.
