Financial Conduct Authority Say Cash Savers Need Better Information
The Financial regulator recently confirmed that around £160 billion of funds held in easy access accounts earn a rate equal or lower to current Bank of England rate of 0.5% in 2013.
Research at the Financial Conduct Authority also exposed the fact that savers found it difficult to find out what rate they were on and were put off by the expected inconvenience of switching products.
The regulator also found that simple changes in the timing and content of communications from financial institutions could make shopping around for savers significantly easier.
Christopher Wooland the director of strategy and competition at the Financial Conduct Authority said “…more needs to be done to reduce the hassle for consumers to switch their savings…..”
The research conducted by the Financial Conduct Authority found that balances in older accounts held, typically earn lower interest rates than those in more recently opened accounts.
The regulator proposes the following changes for savers:
- Asking providers to be more transparent about how reductions in interestrates on variable savings accounts are applied the longer a consumer holds the account. This includes displaying prominently the lowest rate of interest any of their customers receives.
- Requiring consumers to be given clearer, more timely information to help them compare their saving account with alternative products and know how to switch if they want to do so. As part of this, the FCA is not proposing to ban introductory bonus rates because they can benefit some customers, but the FCA does expect providers to improve the way they communicate interest rates changes and bonus rate expiry to consumers.
- Making it easier to provide a way for consumers to view and manageaccounts with different providers in one place.
- Making the switching process as easy as possible so consumers are not put off moving their money to another provider or to another savings account with the same provider, and a reduction in the current 15 day switching time for cash ISAs
This entry was posted on January 26, 2015