FCA update on cash savings - December 2023

We update on progress in the cash savings market since we published our review in July 2023.

In July we published a review of the cash savings market, setting out an action plan to ensure that banks and building societies are:

  • passing on interest rate rises to savers appropriately
  • communicating with customers much more effectively
  • offering better savings rate deals to customers

We committed to monitoring relevant firm and market statistics, linked to the outcomes we want to see on cash savings. This update sets out how the market has developed since then, as well as where firms need to continue to make progress towards the consumer outcomes we expect. We expect to see continued improvements from firms.

Improved savings rates

Since the publication of the cash savings market review, we have seen progress in the speed and size of interest rate changes for savers and improvements in cash ISA transfer performance across the market.

The average rate paid on easy access deposits in October 2023 was 1.99%. This compares to an average rate of 1.66% in July 2023 (prior to the publication of our review) and 0.89% in January 2023. The equivalent for fixed-term accounts (which guarantee a rate for a specified period with restricted withdrawals) and notice accounts (which have a specified notice period for restricted withdrawals with a guaranteed rate) was 2.94% in July 23 rising to 3.52% in October 2023. There are rates much higher than this available, including many accounts that currently pay 5% or higher (for both easy access and fixed term deposits). As of 04 December 2023, there were 311 Instant / No Notice accounts available paying over 3%, 173 over 4% and 37 over 5%.

The base rate has risen by 0.25 percentage points since July, meaning firms have, on average, increased rates by more than the value of the August base rate rise across all types of account. This positively suggests some greater responsiveness from firms to the most recent base rate rise and greater competition in the market, although we recognise that some of this increase may be a delayed response from previous rises.

We have continued to see savers moving deposits out of easy access accounts and into higher paying fixed-term and notice accounts. From July 2023 to October 2023, both the volume of deposits held in bank and building society non-interest-bearing accounts and easy access accounts reduced by £11bn. Deposits held in fixed-term and notice accounts increased by £17bn. This continues an earlier trend. Between January 2023 and October 2023 deposits held in easy access accounts have reduced by £86bn, and deposits held in fixed-term and notice accounts have increased by £57bn.   

Next steps

We have observed some improvements in the savings market and our work is ongoing.

  • We have seen positive progress in firms' responsiveness to the most recent base rate change for some of the lowest paying products available on the market. However, we are continuing to identify and challenge those firms that appear to be taking too long to react.
     
  • We will continue to monitor firms’ approaches to providing fair value for on-sale and off-sale savings products.
     
  • Following the introduction of the Consumer Duty, we requested 9 firms to provide us with their fair value assessments (FVAs) for their lowest paying (on-sale) easy access savings accounts. Our review of these FVAs has raised important questions about how firms assess value. We will work closely with firms over the next few months to ensure their assessments are fit for purpose. We remain committed to taking robust action against firms who cannot demonstrate fair value.
     
  • Many off-sale products offer some of the lowest rates available on the market and we expect firms to accelerate their assessments, applying the lessons learned from our review of on-sale products, to be able to demonstrate fair value when the Consumer Duty applies to off-sale products in July 2024.
     
  • Where customers want to switch to better value products, it is important they are able to do so easily and quickly.  We have seen improvements in the Big 9 (Lloyds Banking Group, HSBC, NatWest Group, Santander UK, Barclays, Nationwide Building Society, TSB Bank, Virgin Money UK, The Co-operative Bank) cash ISA transfer performance since publishing our review in July. We have been challenging firms across the market that are not consistently meeting the voluntary industry agreement of completing a minimum of 85% of cash ISA to cash ISA transfer requests within 7 working days.  We will continue to closely monitor this, and industry’s progress against the new target of 90% of cash ISAs being completed within 7 working days for the largest banks and building society. 
     
  • We are continuing our analysis based on data from a sample of firms to understand the contribution that cash savings products make to firms’ profitability, and how this has changed since the UK base rate started rising.
     
  • In July 2023 we published a joint letter with the Information Commissioner’s Office, confirming that data protection regulations do not prevent firms from informing customers about better rates.  We have subsequently requested the largest firms to provide their customer engagement plans, setting out how they are prompting customers in low paying savings accounts to consider alternatives.  We are encouraged that most firms appear to have increased their communications to these customers and we will continue to review the effectiveness of firms’ plans.
     
  • We will also continue to progress other elements of the 14-point action plan. We are engaging with stakeholders on how their work contributes to the outcomes we are seeking, including the Money and Pensions Service (MaPS) on their work to support consumers to save regularly, strengthening their financial resilience, and with industry on its voluntary commitments on Open Savings and a savings dashboard. 

Data update

Timing of firms’ savings rate changes in response to base rate changes

We have reviewed the time the Big 9 have taken to make changes to their savings product rates in response to recent base rate changes. We used on-sale (products which are currently on sale and available to customers to open a new account) savings rate data sourced from Moneyfacts to support this.

There have been 13 base rate rises since the beginning of 2022 – this table shows the average time taken to increase the rates, although there is significant variation between firms.

First 6 base rate rises

(January 2022 to September 2022)

Subsequent 7 base rate rises

(October 2022 to August 2023)

Since July Report

(August 2023)

11 weeks

5 weeks

3 weeks

Differences between on-sale and off-sale products

We have reviewed the rates provided on a sample of the Big 9’s off-sale easy access products (where these appear to have equivalent features to currently available on-sale products). The situation is very similar to July, where three firms have shown limited progress in aligning rates between on-sale and off-sale products:

No difference in rates

Slightly higher rates paid to on-sale products – due to introductory and bonus offers

Lower rates paid to legacy customers on previous product issues

4 firms

2 firms

3 firms

Cash ISA to cash ISA switching

A voluntary industry agreement sets a target for firms to complete a minimum of 85% of cash ISA to cash ISA transfer requests within 7 working days. The Big 9 committed to increase this target to 90%. 

The table below shows collective performance across the Big 9.

Q2 2023

Q3 2023

87%

90%

Source: UK Finance

The performance figures we cite have been calculated based upon data submitted to the FCA by UK Finance. UK Finance collect firm-level data on cash ISA to cash ISA transfer performance. However, as some of the data has been manually submitted from firms, UK Finance cannot guarantee the completeness or accuracy of the data shared.

Analysis of on-sale and off-sale easy access savings rates

The tables below set out some of the higher and lower paying easy access products on the market. We consider easy access savings products to be those accounts where the whole balance can be withdrawn immediately without prior notice or penalty, and where withdrawal restrictions will not impact upon the rate paid. 

The tables rank products based on the interest rate paid on a £1 balance at a given date. This data shows the range of products available – including many paying in excess of 5%. In practice, many of the products listed will offer different features or be structured to meet varied customer needs. It is important to note that the tables do not represent the full product proposition, simply the interest rate paid.

We have set out below:

Download the tables (XLSX)

We have produced the tables using data that has been sourced from Moneyfacts. The tables show the AER (%) paid on each product as of 04 December 2023 (on-sale) and 01 December 2023 (off-sale). AER is the Annual Equivalent Rate and reflects how much interest the savings product will pay over the year, taking into account any compounding interest, bonuses, and charges.

As we are publishing rates available on the market at a set point in time, the tables will not update as rates change. However, consumers can access a range of up-to-date information on the rates available from a variety of independent sources to best suit their needs. Some of these are outlined on the government sponsored MoneyHelper website.

Please note the following:

  • Products are ranked in the tables based on the AER paid at a £1 balance. However, we recognise that some products offer different features in addition to the AER and some firms pay materially higher rates at higher balance thresholds. These additional rates are shown in the tables for transparency.
     
  • Some products may cap the level of deposits which receive the advertised rate.
     
  • Products where a withdrawal limit can apply and impact the rate paid have been excluded.
     
  • The following account types have been excluded due to conditions that limit the capability of some consumers to access and operate the product: Regular Savings accounts; Children’s accounts; Affinity accounts; Additional Permitted Subscription ISAs; and Lifetime ISAs.
     
  • Some products may have a temporary introductory or bonus rate (included in the AERs shown) and may revert to a different product and rate after a specified period of time.
     
  • Some products shown may require the consumer to hold a current account at the provider to open and access the account.
     
  • Some of the brands shown may not directly accept deposits and may be acting as a deposit aggregator or intermediary.
     
  • Only one product is listed where a firm has multiple products paying the same AER.
     
  • AERs for off-sale products are accurate at the time Moneyfacts sourced data on the product during the preceding month. Brands may have changed the rate paid after the data had been sourced.
     
  • Some of the on-sale products shown may no longer be available to new customers at the time of publishing.
     
  • Some products may only be available to online customers.

Higher rate on-sale easy access products

(ranked on the AER paid on a £1 balance, rates as at 4/12/2023)

Brand Account Account Type Rank AER (%) £1 AER (%) £1K AER (%) £5K AER (%) £10K AER (%) £25K AER (%) £50K AER (%) £100K AER (%) £250K Best AER (%) – All Tiers
Santander Santander Edge Saver (Issue 1) Variable 1 7 7 0 0 0 0 0 0 7
Metro Bank Instant Access Savings Account Variable 2 5.22 5.22 5.22 5.22 5.22 5.22 5.22 5.22 5.22
cahoot cahoot Sunny Day Saver (Issue 1) Variable 3 5.2 5.2 0 0 0 0 0 0 5.2
Hampshire Trust Bank Online Easy Access Account (Issue 15) Variable 4 5.15 5.15 5.15 5.15 5.15 5.15 5.15 5.15 5.15
Barclays Bank Rainy Day Saver Variable 5 5.12 5.12 1.16 1.16 1.16 1.16 1.16 1.16 5.12
cahoot cahoot Simple Saver (Issue 2) Variable 5 5.12 5.12 5.12 5.12 5.12 5.12 5.12 5.12 5.12
Metro Bank Instant Access Cash ISA Cash ISA 7 5.11 5.11 5.11 5.11 5.11 5.11 5.11 5.11 5.11
Cynergy Bank Online Easy Access Account (Issue 69) Variable 8 5.1 5.1 5.1 5.1 5.1 5.1 5.1 5.1 5.1
Zopa Smart ISA - Access ISA pot Cash ISA 9 5.08 5.08 5.08 5.08 5.08 5.08 5.08 - 5.08
Principality BS Online Bonus ISA Cash ISA 10 5.06 5.06 5.06 5.06 5.06 5.06 5.06 5.06 5.06
Skipton BS Base Rate Tracker Issue 5 Variable 10 5.06 5.06 5.06 5.06 5.06 5.06 5.06 5.06 5.06
Cynergy Bank Online ISA (Issue 44) Cash ISA 12 5 5 5 5 5 5 5 5 5
Secure Trust Bank Access Account (Issue 10) Variable 12 5 5 5 5 5 5 5 5 5
Ford Money Flexible Saver Variable 14 4.95 4.95 4.95 4.95 4.95 4.95 4.95 4.95 4.95
Chip Chip Instant Access Account (powered by ClearBank) Variable 15 4.84 4.84 4.84 4.84 4.84 4.84 4.84 4.84 4.84
Yorkshire Building Society Internet Saver Plus Issue 14 Variable 16 4.8 4.8 4.8 4.8 4.8 4.8 4.8 4.8 4.8
Virgin Money Easy Access Cash ISA Exclusive Issue 2 Cash ISA 17 4.76 4.76 4.76 4.76 4.76 4.76 4.76 4.76 4.76
Marcus by Goldman SachsВ® Online Savings Account Variable 18 4.75 4.75 4.75 4.75 4.75 4.75 4.75 4.75 4.75
OakNorth Bank Easy Access Cash ISA Cash ISA 18 4.75 4.75 4.75 4.75 4.75 4.75 4.75 4.75 4.75
SAGA Saga Easy Access Savings Account Variable 18 4.75 4.75 4.75 4.75 4.75 4.75 4.75 - 4.75
Tesco Bank Internet Saver Variable 18 4.75 4.75 4.75 4.75 4.75 4.75 4.75 4.75 4.75

Lower rate on-sale easy access products

(ranked on the AER paid on a £1 balance, rates as at 4/12/2023)

Brand Account Account Type Rank AER (%) £1 AER (%) £1K AER (%) £5K AER (%) £10K AER (%) £25K AER (%) £50K AER (%) £100K AER (%) £250K Lowest AER (%) - All Tiers
Kent Reliance Cash ISA - Easy Access - Issue 45 Cash ISA 1 0.1 4.82 4.82 4.82 4.82 4.82 4.82 4.82 0.1
Punjab National Bank (International) Limited Savings Account Variable 2 0.75 0.75 0.75 0.75 0.75 0.75 0.75 0.75 0.75
Sainsbury's Bank Variable Rate Cash ISA Cash ISA 3 1 4.91 4.91 4.91 4.91 4.91 4.91 4.91 1
Union Bank of India (UK) Ltd Savings Account Variable 3 1 1 1 1 1 1 1 1 1
Citibank UK Limited Flexible Saver (Citi clients) Variable 5 1.01 1.01 1.01 1.01 1.01 1.01 1.01 - 1.01
Sainsbury's Bank Extra Saver Variable 6 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3
Lloyds Bank Easy Saver Variable 7 1.4 1.4 1.4 1.4 1.45 1.45 1.9 1.9 1.4
Bank of Scotland Access Saver Variable 8 1.45 1.45 1.45 1.5 1.5 1.8 1.8 1.8 1.45
Halifax ISA Saver Variable Cash ISA 8 1.45 1.45 1.45 1.5 1.5 1.8 1.8 1.8 1.45
TSB eSavings Variable 10 1.5 1.5 1.5 1.5 1.6 1.7 1.8 1.8 1.5
TSB Cash ISA Saver Cash ISA 11 1.6 1.6 1.6 1.6 1.7 1.8 1.9 1.9 1.6
Danske Bank Danske Instant Access Variable 12 1.65 1.65 1.65 1.65 1.65 1.65 1.65 1.65 1.65
Barclays Bank Everyday Saver Variable 13 1.66 1.66 1.66 1.66 1.16 1.16 1.16 1.16 1.16
Bank of Ireland UK Classic Saver Variable 14 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7
Lloyds Bank Club Lloyds Saver Variable 14 1.7 1.7 1.7 1.7 1.75 1.75 2.2 2.2 1.7
Santander Easy Access Saver (Issue 25) Variable 14 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7
NatWest Flexible Saver Variable 17 1.75 1.75 1.75 1.75 2.25 2.25 2.7 3.3 1.75
Royal Bank of Scotland Flexible Saver Variable 17 1.75 1.75 1.75 1.75 2.25 2.25 2.7 3.3 1.75
Ulster Bank Cash ISA Cash ISA 17 1.75 1.75 1.75 1.75 3.2 3.2 3.2 3.2 1.75
smile Smile No-Notice Savings Account Variable 20 1.81 1.81 1.81 1.81 1.81 1.81 1.81 1.81 1.81
The Co-operative Bank Smart Saver Variable 20 1.81 1.81 1.81 1.81 1.81 1.81 1.81 1.81 1.81
Earl Shilton BS Instant Access Double Top Shares Variable 22 1.9 2.1 2.1 2.3 2.3 2.3 2.3 - 1.9
first direct Savings Account Variable 23 2 2 2 2 2 2 2 2 2
HSBC Flexible Saver Variable 23 2 2 2 2 2 2 2 2 2
M&S Bank M&S Everyday Savings Account Variable 23 2 2 2 2 2 2 2 2 2
Paragon Bank Easy Access Savings Account - Issue 12 Variable 23 2 2 2 2 2 2 2 2 2
Saffron BS Easy Access Account Variable 23 2 2 2 2 2 2 2 2 2
Reliance Bank Instant Access Savings Account Variable 28 2.15 2.15 2.15 2.15 2.15 2.15 2.15 2.15 2.15
Darlington BS Instant Access Account Variable 29 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2
AIB Select Account Variable 30 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25
Allied Irish Bank (GB) Demand Deposit Account Variable 30 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25
Danske Bank Danske Prestige Savings Variable 30 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25
HSBC HSBC Premier Savings Variable 30 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25 2.25
Nationwide BS Instant Access Saver Issue 11 Variable 30 2.25 2.25 2.25 2.3 2.3 2.35 2.35 2.35 2.25
The Co-operative Bank Base Rate Tracker Savings Account Variable 30 2.25 2.25 2.25 2.75 3.25 3.75 5 5 2.25
Ulster Bank Private Reserve Savings Account Variable 30 2.25 2.25 2.25 2.25 2.25 5.01 5.01 5.01 2.25

Lower rate off-sale easy access products

(ranked on the AER paid on a £1 balance, rates as at 4/12/2023)

Brand Account Account Type Rank AER (%) £1 AER (%) £1K AER (%) £5K AER (%) £10K AER (%) £25K AER (%) £50K AER (%) £100K AER (%) £250K Lowest AER (%) - All Tiers
Virgin Money Passbook Account Variable 1 0 0.1 0.1 0.1 0.35 0.35 0.35 0.35 0
Kent Reliance Easy Access Cash ISA - Issue 35 Cash ISA 2 0.1 3.68 3.68 3.68 3.68 3.68 3.68 3.68 0.1
Northern Rock Save Direct Access Variable 2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
Kent Reliance Easy Access Cash ISA - Issue 8 Cash ISA 4 0.15 4.4 4.4 4.4 4.4 4.4 4.4 4.4 0.15
ICICI Bank UK HiSAVE Bonus Saver Account Variable 5 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2
Virgin Money Instant Savings Account Variable 5 0.2 0.2 0.2 0.25 0.25 0.25 0.25 0.25 0.2
UBL UK Personal Sterling Savings Account Variable 5 0.2 0.2 0.2 0.25 0.25 0.25 0.25 0.25 0.2
Yorkshire Bank Savings Account Plus Variable 5 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2
Kent Reliance Easy Access Cash ISA - Issue 11 Cash ISA 9 0.25 4.4 4.4 4.4 4.4 4.4 4.4 4.4 0.25
Northern Rock Access Saver Variable 9 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25
Virgin Money Everyday Saver Variable 9 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25
SAGA Saga Internet Saver Stage 2 (Issue 5) Variable 9 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25
Reliance Bank Cash ISA Cash ISA 13 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3
Kent Reliance Easy Access Cash ISA - Issue 19 Cash ISA 13 0.3 4.4 4.4 4.4 4.4 4.4 4.4 4.4 0.3
Hampshire Trust Bank Online Easy Access ISA (Issue 2) Cash ISA 15 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4
Kent Reliance Easy Access Cash ISA - Issue 20 Cash ISA 16 0.55 4.4 4.4 4.4 4.4 4.4 4.4 4.4 0.55
Citibank UK Limited Flexible Saver Issue 12 (Citigold clients) Variable 17 1 1 1 1 1 1 1 1 1
Cynergy Bank Online Easy Access Account - Issue 52 Variable 17 1 1 1 1 1 1 1 1 1
Cynergy Bank Online ISA (Issue 22) Cash ISA 19 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05
Chip Easy Access (powered by Allica Bank) Variable 20 1.1 1.1 1.1 1.1 1.1 1.1 - - 1.1
Tesco Bank Instant Access Savings Account Variable 20 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1
Santander Instant Saver Variable 22 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2
Sainsbury's Bank Online Saver Variable 23 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3
Halifax Variable ISA Saver Variable 23 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3
Cynergy Bank Online ISA (Issue 23) Cash ISA 25 1.31 1.31 1.31 1.31 1.31 1.31 1.31 1.31 1.31
Lloyds Bank Online Saver Variable 26 1.4 1.4 1.4 1.4 1.45 1.45 1.9 1.9 1.4
TSB Flexible Savings Account (formerly Bonus Tracker) Variable 26 1.4 1.4 1.4 1.4 1.49 1.59 1.69 1.69 1.4
Cynergy Bank Online ISA (Issue 24) Cash ISA 26 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4
Bank of Scotland Instant Access Savings Account Variable 29 1.45 1.45 1.45 1.5 1.5 1.8 1.8 1.8 1.45
Halifax Instant Saver Variable 29 1.45 1.45 1.45 1.5 1.5 1.8 1.8 1.8 1.45