Following an extensive review of the savings market, the Financial Conduct Authority (the FCA) has released more details on the remedies it proposes to bring in, to better serve and support savers. These include prominently displaying interest rates for savers and naming and shaming the lowest rates paid by banks and building societies.
None of the information is new, it's what we have been doing since we launched four years ago. However, the hope is that as the providers will be required to provide this information for the FCA to publish, we will see a change in behaviour, for the better. This of course remains to be seen, but clearer information on interest rates should be fundamental for savers, so it’s good news that the FCA will be introducing new rules to require firms to display interest rates prominently. It’s a step in the right direction but savers need more.
What is does highlight, is just how bad some so-called savings accounts are, with the most shocking paying as little as 0.01% in the worst cases (from the likes of Danske Bank, Progressive Building Society and Skipton Building Society). But savers don’t need to stand for it and with rates of up to 5% available in high interest paying current accounts for example, they can significantly improve returns.
On an account paying 0.01% a saver with £1,000 invested would see just 10p in interest paid to them over 12 months! If they switched to an account paying 5%, this would soar to £50.
The good news is that rates for new savers are generally on the rise, driven almost entirely by the Challenger Banks, bringing much needed competition to the market. But the gap between existing savings rates and those for new savers continues to widen, so savers must monitor their rates and switch as accounts become uncompetitive.
At Savingschampion.co.uk we alert all of our Rate Tracker users about any changes to their savings accounts, when bonuses expire, rates are reduced and even on the rare occasion when rates increase! With our Rate Alerts, savers can find details of the latest best buy deals from the whole savings market and our Cash Management Service even takes the hassle out of opening and managing multiple savings accounts for those with lump sums of more than £100,000.
If you would be interested to learn more about any of services and how we can improve the interest on your savings, call and speak to one of our specialist savings advisers on 0800 321 3581.
See the lowest paying accounts league table here.