Savings account providers may soon have to show customers how their account compares to the rest of the market on all communications, under plans being discussed by the Financial Conduct Authority (FCA.)
In a market study published today, the regulator called for this information to be presented in a ‘switching box’, which would reveal whether a provider offers savings products with better interest rates – as well as how a customer’s account measures up with market-leading accounts.
This information can also be discovered by using the Which? Savings rates booster.
Find out more: Which? Savings rates booster – find out how to improve the returns on your savings
FCA criticises savings market
The FCA’s market study showed that competition within savings isn’t working well for savers. The £700 billion industry came in for criticism for not doing enough to help savers get better rates, finding that 80% of easy access accounts had not been switched in the last three years.
The regulator called for savers to be given the opportunity to view and manage accounts with different providers in one place – and for the savings switching timescale (currently 15 days) to be reduced to around seven days.
Savings account providers were told to improve the way they communicate interest rate changes and bonus rate expiry to consumers by giving clearer, more timely information to help them compare and switch savings accounts.
The report also highlighted how providers need to become more transparent about how reductions in interest rates on variable rate savings accounts are applied, by displaying prominently the lowest rate of interest received by any of their customers.
Which? Money Compare table: Savings accounts and Isas – hundreds of accounts compared
Scrap the Savings Trap
Which? has been campaigning for many of the recommendations in the report for some time.
Our ‘Scrap the Savings Trap’ campaign has sought to improve the information banks give to consumers to help them get the best return on their savings, make the ISA switching process easier, and get customers out of low-paying ‘zombie accounts’ and into default easy-access savers or Isas at the end of fixed terms.
By our estimates savers are losing out to the tune of £4.3 billion a year as a result of being stuck with poor value savings accounts.
Speaking about the publication of the report, Which? executive director Richard Lloyd said: ‘For too long, banks and building societies have left customers trapped in savings accounts paying woefully low interest rates and losing out on billions.
‘We now expect to see the industry working with the regulator to make these recommendations a reality as soon as possible. The banks must quickly start playing fair and help consumers get a good deal.’
Find out more: Scrap the Savings Trap – join over 50,000 supporters by signing our petition
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Which Ltd is an Introducer Appointed Representative of Which? Financial Services Ltd, which is authorised and regulated by the Financial Conduct Authority. Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited.