The FCA has today published the second set of data showing the lowest interest rates offered by 32 providers of easy access cash savings accounts and easy access cash ISAs. The data is part of the FCA’s ‘sunlight remedy’, which shines a light on firms’ strategies towards their long-standing customers. The data shows that some accounts pay as little as 0.01 per cent.
Alongside this, the FCA has also published an update on the remaining work on the cash savings market study and findings of a series of trials with 130,000 consumers that explored ways to encourage consumers to switch to better savings accounts.
Christopher Woolard, Director of Strategy and Competition at the FCA, said:
“We said that one of our priorities this year will be focused on the treatment of long-standing customers. Our new rules, coming into force at the end of the year, will help consumers get the facts they need to make an informed decision about what to do with their savings.
“In a well-functioning market, providers should be competing to offer the best possible deal to consumers. Our sunlight remedy data shows that some consumers could be better off by opening a different account.”
The sunlight remedy is one element of a broader package of remedies aimed at delivering better outcomes for customers of cash savings accounts. From December 2016, firms will have to provide easy-to-understand key information in a summary box to help consumers compare savings accounts, as well as clearly reminding consumers about changes in interest rates or the end of an introductory rate. Firms will also be required to provide a quicker and easier switching process.
The trials that the FCA carried out tested a number of additional remedies:
- Digital reminders – to test the effectiveness of reminders about interest rate changes sent by email and SMS in comparison to letter-based reminders previously tested.
- A switching box – provided periodically to customers that would give information on the potential financial gains from shopping around and switching, prompting customers to consider their choice of account and provider.
- A return switching form – a very simple ‘tear-off’ form and pre-paid envelope enabling a customer to switch to a better paying account offered by their existing firm more easily.
The finding of the trials showed that digital reminders via SMS and email were positive and indicated that they were just as effective as letter reminders. The research also found that the switching box and the return switching form had some positive effects, but they only stimulated switching within the same bank and did not increase switching to better accounts offered by other providers.
Overall, the research showed that some of our proposed remedies, such as the switching box, that we initially intended to implement did not have the expected impact and the FCA will not proceed with these remedies without further analysis.
Following the trial findings the FCA will investigate alternative options to encourage more shopping around. The FCA will report on these findings at the end of this year.