From the 1 December new measures were introduced by the Financial Conduct Authority (FCA), designed to improve the cash savings market and help consumers get the information they need to make informed decisions about their savings.
The Cash Market Study has been running for several years in an attempt to bring in better practices by savings providers and although the original ideas, suggestions and proposals were good, they have been somewhat watered down. A number of key changes have come into force however, all of which we welcome as they will make information more clear and go some way to help give savers more information to incentivise them to switch from poor paying accounts.
Some big and we believe fundamental changes have come into force around providing more clear information about interest rates. All providers must now provide an easy-to-understand upfront summary box which highlights the details of the account and clearly sets out the interest rate applicable (as opposed to having it elsewhere on the website or in a leaflet), along with information on how much interest you will earn in pounds (or pence).
The new summary box will also make bonus information, underlying rates and the bonus period that is applicable more clear and provides a clear explanation of what happens at the maturity of a fixed term account. Providers must also make clear whether the interest rate can be changed by the provider and if so, when you will be informed of the change.
Another change is that providers now have to be clear when informing savers about a change in interest rate, including changes due to the end of an introductory period. The rules now state that the bank or building society must contact you in writing about any rate cut, whatever the amount, as long as you have at least £100 in the account. Before the 1 December, providers only had to inform savers if the interest rate was cut by more than 0.25% or by more than 0.50% in one year, which could be confusing, so this is a real improvement. Providers are also required to inform account holders at least 14 days in advance of a change, a rule that also applies to fixed term maturities, ensuring that customers are informed in good time to take the necessary actions, but not giving so much notice that you’re likely to forget in time to act.
When it came to the display of interest rates, the FCA found that the information was not always easy to find on providers’ websites and the information given varied widely between different firms. The new rules mean that interest rates on both old and new accounts must be clearly displayed on websites and kept up-to-date, no more than one click away from an online statement and featured prominently on paper statements.
Switching to a new account with the same provider has now been made easier, although at this stage this does not apply to switching to an alternative provider, an area where we hoped more action would be taken, as this remains a significant barrier to savers looking for a better deal.
One of the key reasons why these measures were put in place after an extensive period of study from the FCA is to encourage people to switch from poor paying accounts into better alternatives. The FCA has published a series of data sets, known as its ‘sunlight remedy’, the third and final one of which was released on the 1 December. These showed some of the worst paying accounts from 32 providers and covered easy access accounts and easy access cash ISAs. With some accounts paying 0% and some others as low as 0.01%, this naming and shaming of some of the worst culprits was a clear attempt to change some of the behaviours prevalent at some banks and building societies, but also highlights just how important it is to not accept low interest rates and to vote with your feet.
These are just some of the challenges that we have been trying to combat throughout our lifetime and in fact just keeping savers informed was one of the main reasons why we launched in the first place. One of the first steps to getting a better deal is to be in possession of all the facts and these remedies are a definite step in the right direction. However, it is disappointing that it’s taken the intervention of the regulators to make this happen.
Those looking to switch providers for a better deal will still need to do most of the legwork themselves unless other measures are put in place. To make this even easier Savings Champion is of course here to help. Using our independent best buy tables or by speaking directly to one of our Bath-based savings experts means that you don’t have to trawl through numerous websites in search of the best deals.
For those with larger amounts to deposit but without the time to do the legwork you can also take advantage of our Concierge Service, taking on the hard work on your behalf. Please get in touch on 0800 321 3581 to find out more.