Savers with cash accounts will benefit from a new package of measures published today by the Financial Conduct Authority (FCA) designed to improve competition by encouraging easier and quicker switching and improving the information savers receive.
From December 2016, firms will have to provide clear information on interest rates offered on cash savings products as well as clearly reminding consumers about changes in interest rates or the end of an introductory rate.
The FCA has also published the first set of data[1] on the lowest interest rates offered by 32 providers of easy access cash savings accounts and easy access cash ISAs. The aim of this publication is to shine a light on those firms’ strategies to longstanding customers. The FCA will be publishing this information on a trial basis for 18 months at six-monthly intervals.
Christopher Woolard, Director of Strategy and Competition at the FCA, said:
“With many savers never switching because they don’t think it will make a difference, our rules will help consumers get the information they need to shop around. In a good market, providers should be competing to offer the best possible deal and should a consumer wish to move accounts, they should be able to do so with the minimum of fuss.
“Our rules are about giving consumers the facts they need to make an informed decision about what to do with their savings, and the ability to act on it quickly.”
The FCA is also working with industry to deliver seven working day switching for the vast majority of cash ISA transfers from January 2017.
New rules include:
- Requiring firms to provide key information in a product summary box at point of sale, replacing provisions about the summary box that currently sit in confirmed industry guidance.
- Being clear on what interest rate consumers are getting. Introducing a new rule requiring firms to display interest rate information prominently alongside account balance information in all rate related customer communications.
- Quicker and easier switching. Introducing a new rule which requires firms to provide a prompt and efficient service so that a customer can switch to a better account offered by the same firm.
The finalised rules will come into effect on 1 December 2016.
Notes to editors
- Policy Statement[2]
- The finalised measures are a response to the FCA’s market study into competition in the cash savings sector. 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.
- The study found that providers have significant amounts of consumers’ balances in accounts opened long ago (eg more than 5 years ago ) yet these accounts paid lower interest rates than more recently opened accounts. It also found providers needed to improve the transparency of their practices.
- On 1 April 2013 the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
- The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers, to protect and enhance the integrity of the UK financial system, and to promote effective competition in the interests of consumers.
- Find out more information about the FCA[3]