In a win for our Scrap the Savings Trap campaign the Financial Conduct Authority (FCA) today announced proposals to make switching savings accounts quicker and easier. Savings providers will also be required to provide clearer information on interest rates and better alert customers to the end of bonus rates.
Which? Executive Director Richard Lloyd responded:
"For too long, banks and building societies have left customers languishing in poor value savings accounts so today's move from the FCA is a significant win for savers and the 69,000 people who supported our Scrap the Savings Trap campaign.
"With many savers never switching because they don’t think it will make a difference, it's good that the FCA has listened to our calls to make savings providers do more to help customers get a better deal."
Which? had estimated that savers were losing out on £4.3bn each year by being stuck in sub-standard savings accounts.
As the Isa deadline approaches, our research has found that bank and building society staff’s knowledge of cash Isas is shockingly poor and could be leaving customers out of pocket.
Richard Lloyd, Which? executive director, said:
‘It is inexcusable for so many bank staff to have such a worrying lack of knowledge about the basics of Isas, especially when it could be costing customers dear. Banks should have systems in place to ensure customers can rely on them to give up to date and accurate information.
'With new reforms announced by the Chancellor this week, the banks must do better, starting by properly equipping their staff so customers can be confident they’re getting the right advice about how to make the most of their hard-earned savings.'
Isas are supposed to be simple savings products, but when we posed as new customers to ask straightforward questions about savings limits and transfers we found real problems. For example, there was widespread confusion and poor information on Isa transfer rules - though these have been established for years. Eight in ten bank staff couldn't identify the new 2015/16 Isa limit of £15,240. In fact, some banks hadn’t updated their systems for their staff to look the figure up.
The worst performers (Co-operative Bank and Yorkshire Bank) answered just 31% of questions correctly.
Our Scrap the Savings Trap campaign calls for quicker Isa switching and for interest rates and terms for all accounts to be clear, easier to compare and provided regularly to customers.
The Financial Conduct Authority (FCA) is taking steps to ensure banks and building societies display interest rates clearly and prominently, and improve the way they let customers know about the end of bonus rates and fixed terms on accounts. However, these improvements only consider written communications. They should be reflected in all customer service, so that people can get the facts and make informed decisions about their savings.
Today the Financial Conduct Authority (FCA) published the final report from its cash savings market study.
Over 50,000 people supported our Scrap the Savings Trap campaign, which helped to secure a number of proposals in the report that should help savers get the best rate. These include:- Making the ISA switching process simpler and quicker – reducing the time scales from 15 working todays to nearer 7 - Prominent display of current interest rates in statements, on websites and in other communications with customers can easily compare accounts - Stopping saving providers automatically renewing people into new fixed terms savings – to ensure people make a clear choice instead of automatically being put into a low-interest account - More transparency from banks and building societies which will help us hold them to account – including forcing them to show the lowest interest rate they offer any of their customers
'For too long, banks and building societies have left customers trapped in savings accounts paying woefully low interest rates and losing out on billions.
'More than 50,000 people supported our campaign to get people a better deal on their savings and 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.'
The FCA will be consulting on their proposals until 18th February, and then will publish their final remedies in the Spring. We will continue to work with the FCA to ensure savers get a good deal instead of being stuck in sub-standard accounts.
Read the FCA’s cash savings market study report.
We're calling on the Government to introduce a national savings strategy in 2015 as we find a third of people are planning to save less in the coming months.
The latest findings from our Consumer Insight Tracker show that nearly half are worried about their level of savings and a third of people are planning to save less in the coming months.
Our research found that a quarter of people have no savings at all. Although not everyone can afford to save more or may be prioritising paying down debts, we previously identified that around 14 million people could be encouraged to save more. Of these approximately 2.5 million don’t save but could afford to.
As the economy turns a corner, we're calling on the Government to do more to support better savings habits next year and by doing so help households that can afford to save improve their ability to cope with financial shocks. In 2015 we want to see a national savings strategy introduced, to be developed with the financial services industry, employers and consumer groups.
Our executive director, Richard Lloyd, said:
'Not saving enough leaves people more vulnerable to financial shocks. As the economy picks up, the Government must act to develop a national savings strategy.'
With half the population worried about the size of their savings pot, we also need to see banks and building societies play their part by scrapping the savings trap and freeing savers from poor value accounts.
Our new research reveals four out of every 10 instant-access savings accounts and cash ISAs come with restrictions.
Two-thirds of Which? members who save say they would expect to be able to withdraw their money from an account branded “instant-access”, whenever they liked, with no restrictions.
But we found 39% of the 285 instant-access and cash ISA savings accounts currently available come with rules and restrictions that can prevent people accessing their savings, or being eligible for the account in the first place.
In the worst cases, 32 of the 285 accounts called “instant-access” actually limit the number of withdrawals you can make during a year.
We also found a third of instant-access cash ISAs, including nine of the highest paying 15, don’t allow you to transfer previous years’ ISA savings, meaning you could be missing out on higher rates of interest on these savings.
Our executive director, Richard Lloyd, said:
'People often assume ‘instant-access’ means there are no strings attached, but too often that’s not the case and you can’t always access your savings without being penalised. Savings providers should be more upfront about the terms and conditions of all their accounts and allow transfers in to new ISAs.'
We’re calling for savings providers to Scrap the Savings Trap and help people make the most of their money. You can help by signing our petition.
Our latest report reveals that 14 million people could be encouraged to save more.
We explored consumer behaviour and attitudes to saving in the UK and found that around 11.5 million people struggle to save regularly, and 2.5 million don’t save but could afford to.
With half the population unhappy with their level of savings, we think the Government should work with the industry and employers to develop a national savings strategy, learning from those who save effectively.
We don’t want those who do save to be stuck in savings traps. So far more than 25,000 of you have signed our campaign to Scrap the Savings Trap.
Our executive director, Richard Lloyd, said: ‘We’ve looked at the most successful savers and identified the behaviours that the industry and Government should be encouraging to help those who can afford to save, save more.’
We're sharing our findings with the British Bankers’ Association who are currently consulting on how to improve the savings culture in the UK.
Which? campaigns to make people's lives simpler and fairer. Get involved in our latest campaigns and find out how to take action. Let's make change happen.