The Financial Conduct Authority (FCA) has proposed to reform the easy access cash savings market to get better rates for customers.
Under the new rules, all firms must set a single easy access rate (SEAR) across all easy access accounts.
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Additionally, firms can offer multiple introductory rates for up to 12 months. After that, they must choose one SEAR for their easy access savings accounts, and one for their savings ISAs.
Christopher Woolard, Executive Director of Strategy & Competition, FCA, said: “Competition is not working well for many of the 40 million consumers with easy access savings accounts and we want that to change. Our proposals would mean firms have a single rate for customers immediately after their accounts have been open for 12 months. Firms will choose the rates they offer, and the rates they offer will have to be clearly published.
“This will prevent firms from gradually reducing interest rates over time and make them compete for all their customers. We are concerned that many longstanding customers are seeing a poor outcome and we want firms to focus more on these customers. The new rate will also make it easier for savers to know whether they are getting a good deal after any introductory offer has expired.”
Improve interest rates
The FCA’s proposals aim to improve market competition, encouraging firms to increase their interest rates and protect customers that currently receive the lowest interest rates.
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By GlobalDataFurthermore, the regulator predicts consumers will benefit by £260m from higher interest payments.
The SEAR works by requiring firms to pay the same rate to longstanding customers as to customers who have recently come off an introductory offer and are deciding whether to switch or stay with their current product.
FCA’s proposals also require firms to publish data every 6 months on the SEARs they offer.
