Nationwide Building Society chief executive Brian Davis has slammed banks for confusing borrowers into believing they are getting a good deal when many are paying over the odds.
Davis, who is due to retire in December, claims banks and plcs are treating their mortgage customers with disdain by keeping them on a high standard variable rate after their initial cheap discount deal has expired.
He claims they rely on their borrowers failing to realise their special deal has come to an end and also on the inertia of those who are aware.
Davis argues that these factors allow banks to maximise dividends for shareholders.
Davis claims that banks routinely ensure only new customers have access to their lowest remortgage rates as it would be “self-defeating” for them to allow profitable existing borrowers to switch to the cheapest deals. He claims Halifax makes over £600 a year on a typical £60,000
mortgage by banning borrowers from moving to its best rate.
He says: “Banks seem determined to make more and more profit by introducing practices which try and confuse borrowers into believing they getting good deals when they are not. It is a shame that so many players in the financial services market treat their customers with such disdain.”
A Halifax spokesman says: “We are surprised by the comments. Nationwide should really be concerning itself with questioning those lenders who have not joined with us in trying to drive down the cost of borrowing.”