The Financial Conduct Authority (FCA) has released its Cash Savings Market Study findings this week with a range of proposals to improve the savings market.
In 2013 the FCA announced its plans to carry out a market study into Cash Savings in order to ensure competition was working effectively in the savings market.
Following extensive work, including gathering data from a large portion of the savings market, speaking to banks and building societies and getting feedback from industry experts, including ourselves, the report has concluded that the banks haven’t been playing fair. In fact savers have been losing out considerably with £160billion held in savings accounts paying just 0.50% or less and this was data gathered in 2013. The last year has seen continued savings rate reductions so it’s fair to assume this figure will be a lot higher already.
The proposals include giving savers clear information on their rates, both in statements and online. A proposed ‘switching box' where providers would show how customer's rates compare, not only with accounts from the same provider, but also how it compares to the wider market. Added to this, they would like to see easy to understand details on how to switch your account. As 80% of easy access account holders not switching in the last 3 years, the proposals aim to encourage more of us to do so.
Other proposals include getting rid of misleading account names where the rate is less than competitive, but the name might suggest otherwise. Classic examples of this would be the Halifax Liquid Gold account, once a top paying account back in the 80s, but now paying a paltry 0.10%.
We absolutely support the proposals, as many of the failings the FCA have identified are the very reasons why we set up Savings Champion.co.uk and in particular our Rate Tracker service. Savings Champion has been offering whole of market free tools, including theRate Tracking service, similar to the 'switching box' mentioned above.
We’ve been calling for more transparency from providers; rate information should be made clear and not hidden away. We’ve campaigned for an improved switching process to encourage us to move our savings for better returns. And we’ve been complaining about misleading account names.
We recognised that communication, transparency and access to clear, whole of market information has been missing in the savings market and hope the proposed changes will improve competition, something that has been desperately lacking in recent years.
Switching is a vital part of getting better rates for savers. The more of us that switch our accounts, the greater the chance of competition in the market. Savers need to play their part to improve their situation and the proposed changes should encourage more of us to do so. Any savers who believe that there is little to be gained by switching in the current low interest rate environment need to be aware that they could still make hundreds, if not, in some cases, thousands of extra interest by moving. If you’re sceptical, why not take our challenge? As many of our readers will know, we’ve put our money where our mouth is and set a £50 challenge to savers with £100,000 or more in cash based savings. If we can’t improve either the total interest earned or the security of your savings, we’ll donate £50 to a charity of your choic