A leading consumer rights group has urged the Federal Government to massively increase the legal minimum savings rate offered by Belgium's banks, as pressure grows on the financial sector following its recent announcement of bumper profits.
In a press release published on Tuesday, Test Achats reiterated the widely held view that repeated rate hikes over the past year by the European Central Bank (ECB) have largely failed to be passed on to savers. It also vehemently denounced banks' staunch refusal to raise rates of their own volition.
"While banks can now deposit their money at the European Central Bank at 4%, the average interest rate on savings accounts in July was only 0.49%," Test Achats noted. "This is an unfair and unacceptable situation."
Test Achats therefore called on Belgian policymakers to impose a minimum savings rate set at 1 percentage point below the ECB benchmark rate (i.e. 3%): almost thirty times higher than the current minimum rate of 0.11%.
"[This will address] the current situation of a mismatch between the interest that the banks benefit from and the interest that they pass on to savers," the group noted.
Belgium's six largest banks (BNP Paribas Fortis, KBC, ING Belgium, Belfius, Argenta and Crelan) recorded total net earnings of €3.1 billion over the first six months of 2023 – roughly a quarter more compared to the same period last year.
High (in)fidelity
Although Test Achats conceded that many banks have raised their savings rates over the past year, it emphasised that these largely consisted of increases on the fidelity premium rate (which savers only earn on funds deposited for at least one year) rather than the base rate (which savers earn on all deposits).
As Test Achats and others have previously pointed out, the fidelity premium rate is potentially misleading insofar as the vast majority of savers will never actually receive the "full" (i.e. base + fidelity) rate on their deposits.
"If you don't let your money stay on your account for a very long time, you are better off with a higher base rate and a lower fidelity premium rate," Test Achats spokesperson Julie Frère told The Brussels Times. "However, this is not well understood by consumers who 'fall' for the highest general rate (base + fidelity)."
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Any mandated increase will likely be fiercely resisted by Belgium's banks. Febelfin, the Belgian financial sector federation, said earlier this year that a government-enforced rate hike would be an "ill-considered intervention" which could "profoundly affect the stability of the banking sector".
Test Achats will defend its proposal in a Federal Parliament hearing on Wednesday this week.
