Banks fight call for more data on interest rates

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The Independent Online
The Bank of England is to push banks to make available more information on the rates of interest they charge different types of borrowers. But the move will run into fierce resistance from the banks, which fear a new row about their treatment of small business customers.

The Bank of England has sent a draft of proposals on gathering new banking statistics to the British Bankers' Association in advance of negotiations due to start in June. More detail on interest rates is a prominent item on its statistical shopping list.

On the initiative of its chief economist, Mervyn King, the Bank wants to collect information that would allow it to assess how fast and how far changes in base rates are passed on to depositors and borrowers. This is essential if it is to make better judgements on the effect of monetary policy changes on the economy.

The Bank said, in a preliminary article in its latest Quarterly Bulletin: "The main gap is data on rates on business borrowing, ideally split between small, medium and large companies." Mortgage and credit card rates and many deposit interest rates are already publicly available.

The Bank would also like information on the rates banks charge to new as opposed to existing borrowers and on the amount of fixed- versus floating- rate loans.

The clearing banks already provide some information on interest charges on the understanding that it is not published. They fear that publishing more detailed interest rate information would reopen the 18-month-old row about excess charging of small business customers. Banks think many of their customers do not appreciate that higher rates have to be charged on loans bearing higher risk of non-payment.

The Bank of England stepped into the dispute with a review of bank charges, which was concluded just over a year ago. Eddie George, Governor of the Bank, concluded that although small businesses did have exaggerated expectations of their banks, the lenders had been insensitive to the needs of their most vulnerable customers during the recession.

John Ecklin, head of statistics at the British Bankers' Association, said the banks would be happy to co-operate on producing figures needed to operate monetary policy but would oppose the publication of any interest rate details.

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