Nester chief says firm is “ethically bound” to pass on higher rates
The chief executive of Nester has criticised banks for not passing higher rates on to savers, and said his Shariah-compliant peer-to-peer lending platform is “ethically bound” to do so.
Youness Abidou’s comments come as the heads of the UK’s largest banks met with the Financial Conduct Authority (FCA) yesterday. Banks have come under fire for steeply increasing borrowers’ rates in response to the Bank of England’s base rate hikes, while not increasing savers’ rates at the same pace. The regulator has urged the banks to make faster progress in passing these benefits on to savers.
Read more: Nester: ‘More financial inclusion’ could have saved SVB
“As a small provider we can clearly see the damage that this lack of transparency and unethical behaviour is causing,” said Abidou. “The corporate answer that the rates given to savers is ultimately based on the funding needs of the banks, fails to respect the rights of individual savers and ignores the damage being done to the economy. Pushing up borrowing rates and keeping rates for savers low creates a spiral of increased costs and reduced savings, which drives up inflation.
“Independent financial businesses like Nester must respond to the economic environment. If changes to national interest rates create increased profits for our investors, we are ethically bound as a transparent financial services firm to pass these benefits on.”
Nester joins other P2P platforms including Invest & Fund in criticising the banks’ behaviour.
“Arguably, selling inflation-decayed-loss-making products out of one window whilst raising rates on debt products being sold out of the other hatch is unfair profiteering, but it’s somehow embedded in the rules of capitalism, but it’s a difficult argument to make given the times we are living through,” Invest & Fund said.
Nester officially launched to investors in April 2022, as the first directly-authorised Shariah-compliant P2P lending platform.
It provides buy-to-let, refurbishment and bridge financing for corporates and offers investors returns of up to nine per cent, secured on UK property.
It launched the first Shariah-compliant Innovative Finance ISA in May this year.
“Through preparation for our new consumer duty, which requires the firms we regulate to put consumer interests at their heart, we have started to see some positive action by banks and building societies to improve their rates, and to ensure their customers are benefiting from better value products,” the FCA said after its meeting with the banks.
“We now want to see that progress accelerate. We are also increasingly seeing customers switching their savings products to those with higher rates. We continue to urge savers to shop around to make sure they’re getting the best deal.”