23rd July 2015
Switching cash savings accounts is set to become far easier and quicker as a result of new proposals put forward by the City watchdog on Thursday.
The Financial Conduct Authority (FCA) is to introduce a series of new rules that will force firms to provide clear information on the interest rates on their cash savings products as well as clearly alerting consumers to changes in interest rates or the end of an introductory rate for example.
It will even look to name and shame firms who pay poor interest rates to longstanding customers.
The FCA is also working with savings industry to deliver seven day switching for the vast majority of cash ISA transfers from January 2017.
The measures are in response to the FCA’s market study into competition in the cash savings market. This was the second market study under its new competition mandate which found that, for many consumers, competition in the £700bn sector was not working as effectively as it could do.
Christopher Woolard, director of strategy and competition at the FCA, said: “In a good market, providers should be competing to offer the best possible deal. Consumers should expect the information they need to shop around to be clear and easy to understand. When they wish to move accounts, they should be able to do so with the minimum of fuss.
“Our package of measures are all about giving consumers the information they need to make an informed decision about what to do with their savings, and the ability to act on it quickly.”
The FCA’s proposed measures include:
Andrew Hagger of Moneycomms.co.uk said: “These proposed enhancements for savers are welcome but long overdue – providers should have been doing these basics as a matter of course and it shouldn’t have needed the regulator to step in to make it happen. For too long providers have increased profitability to the detriment of customers as their cash sits in accounts offering miserly returns.
“Making interest rate information more prominent and increasing communication when introductory rates come to an end should help consumers earn a better return on their cash. Too often banks and building societies offer best buy deals for new customers whilst hoards of loyal savers on the back book are left with long forgotten deals paying next to nothing.”