Savers Told To Switch Account Providers To Avoid 0.01% Interest Rates
Loyal customers are being hurt the most as companies focus on publicising introductory offers and hiding long-term rates.
F.C.A. Aims To Address The Situation
The Financial Conduct Authority plans to make savings rates more transparent in what it calls a ‘sunlight remedy’. Christopher Woolard, director of strategy at the F.C.A. states that “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”.
He adds, ideally, “in a well-functioning market, providers should be competing to offer the best possible deal to customers.” At present, the consumer group Which? describes the rates offered to long-term customers as “woeful”.
130,000 consumers were involved in a study the F.C.A., started in 2014 where they trialled different methods of encouraging and simplifying the process of people changing accounts.
The advice to customers is clear, unfortunately they do need to constantly switch and reassess their options in order to access the best rates.
The reality of comparing deals however is less than simple. The F.C.A. plans to address this by making firms produce summary boxes that highlight the key details in a uniform fashion starting in December 2016. Customers will also need to be informed when their introductory rates expire and the process of switching accounts must be simplified.
Naming The Worst Providers
32 companies were studied with some cash I.S.A.s found to be offering rates as low as 0.01%, H.S.B.C., Danske Bank, and Ulster Bank being the worst offenders.
Cumberland Building Society and Coventry Building Society were the best for customers, paying 1.5% interest.
Mr Woolard promises that helping long-term customers access better deals will be one of the F.C.A.’s top priorities this year.
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