Banks fail to pass on rate cuts

Leading banks are continuing to raise the cost of borrowing, despite recent cuts in Bank of England base rates, as they attempt to boost their earnings.

The Ulster Farmers’ Union says there is “growing disquiet in the farming community” as banks in some instances impose higher interest rates and bank charges on their farming customers.

UFU president Graham Furey has written to the chief executives of the four main banks in the province.

“Our members have been contacting the UFU to highlight their concerns that banks are imposing unfair additional costs on their business accounts,” he says.

“In the past the banks have reassured us that they were prepared to pass on Bank of England interest rate reductions in full, for the benefit of both their customers and the overall economy.

“However we have significant evidence that this is not the case; in fact many farmers have seen their borrowing rates being adjusted upwards rather than being lowered by their bank. Many farmers also feel that increases in bank charges are completely unjustified,” he says.

“These escalating costs being imposed on farmers have in many cases been accompanied by a “take it or leave it” attitude from bank officials, who cite a change in margin policy and a removal of their ability to negotiate with their customers.

“It is clear that the Bank of England’s efforts to stimulate the economy by lowering interest rates is not being passed on by the commercial banks and this is damaging the relationship between farmers and their bank.”

The UFU hopes to raise these issues directly with senior bank officials in the coming weeks.

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