New FCA rules on savings interest rates

The City watchdog made the announcement as it published the third and final ‘sunlight remedy’ data set, showing the lowest interest rates available from 32 providers of cash savings accounts and easy access cash ISAs.

The process is part of the FCA’s work to shine a light on firms’ strategies towards their long-standing customers. The sunlight remedy is one element of a broader package of measures aimed at delivering better outcomes for customers of cash savings accounts.

From this week, new rules come into force which means that firms will have to provide easy-to-understand key information in an upfront summary box to help consumers compare savings accounts.

Firms will also have to clearly remind consumers about changes in interest rates or the end of an introductory rate. In addition, firms will be required to provide a quicker and easier switching process.

Christopher Woolard, executive director of strategy and competition at the FCA, said:“The new rules coming into force today 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. One of our regulatory priorities is the treatment of long-standing customers and we want to see all customers benefit from competition and innovation in financial markets.”

While the sunlight data deliberately focuses on the lowest possible rate that might be earned by a consumer, and does not represent what every customer is earning, it continues to show that some consumers could be better off by opening a different account.

The sunlight remedy data set shows that in all accounts the median lowest interest rate is higher on open accounts than closed accounts and that the median lowest interest rate is higher on accounts that cannot be managed in branch, compared to those that can.