BRITAIN’S leading high-street banks stand accused of using recent increases in interest rates to make huge profits totalling £1.5 billion from customers.

A study has revealed that the banks have used hikes in the Bank of England base rate to short-change savers while overcharging mortgage borrowers.

This week, the banks will begin unveiling record profits totalling more than £37 billion for 2006 amid renewed concern over their unsavoury practices.

HSBC is forecast to unveil a 16% increase in profits to a new record of £12.32 billion. Barclays is set to announce a 30% rise to £6.85 billion. Royal Bank of Scotland, which owns NatWest, and HBOS (the merger of Halifax and Bank of Scotland) will also reveal record profits.

The banks are accused of cashing in on widespread concern over the soaring costs of living in Britain. Last week the government announced that inflation had risen to 3%, the highest rate for over 10 years.

Consumers already face sharply rising energy bills, council tax demands and mortgage costs as the Bank of England increases rates to try to curb inflation. Homeowners have been warned that further rate rises are imminent — possibly starting next month.

However, the new research reveals that eight of the country’s 10 biggest banks and building societies have manipulated their schemes to boost profits from interest rate rises. The worst offenders are HSBC, Northern Rock and Alliance & Leicester.

Moneyfacts, the country’s most comprehensive source of personal financial data, analysed how the 10 largest savings and mortgage providers responded to changes in the Bank of England rate between November 2003, when interest rates were 3.5%, and December 2006, when they were 5%. It did not cover the recent rise as most banks have yet to announce changes to their rates.

The research found that, despite a 1.5 percentage point hike in the base rate, savings rates have risen by an average of only 1.04 points, while mortgage rates typically rose by the full amount.

HSBC, the survey’s worst offender, has lifted savings rates by an average of just 0.66 points while its mortgage rate increased by 1.76 points — more than the rise in the base rate.

As a result, a saver with £50,000 has lost out on £445 annually, while a borrower with a £200,000 mortgage is paying £520 over the odds.

Alliance & Leicester has passed on an average rise of just 0.67 points to savers but its main mortgage rate is up 1.55 points. Only the Britannia and Nationwide building societies have not cashed in on the base rate rises.

The savings rates offered by the banks are now so poor that it is not worth high-rate taxpayers saving money with them as the rates of interest are lower than inflation. This means the value of savings erodes in real terms.

This weekend, MPs and consumer groups called for the Office of Fair Trading (OFT) to launch a full-scale inquiry into the behaviour of banks. The OFT is currently conducting a limited investigation into the penalty fees levied on consumers. Treasury ministers have already indicated that they believe these fees to be unacceptable.

Vincent Cable, the Liberal Democrat Treasury spokesman, said: “These findings confirm that banks do not give the full benefit of rising interest rates to savers. The Office of Fair Trading and competition authorities should be looking at, and regulating, bank charging practices as a whole and not just selective corners.”

Lisa Taylor of Moneyfacts said: “Interest rate changes give banks and building societies an ideal opportunity to boost profits and this is exactly what they are doing. Customers often do not notice.”

The banks said yesterday that they continued to offer competitive products to their customers, and claimed that movement in the base rate was just one of the factors in pricing products.

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