The Financial Conduct Authority (FCA) has revealed new plans to make it easier for customers to switch savings accounts – but has stopped short of very radical changes such as banning introductory bonus interest rates.
Under proposals published by the UK financial regulator, banks will have to alert customers to changes to interest rates or the maturity of a fixed-term account. This is designed to change the current environment whereby savings accounts customers automatically move on to a worse interest rate after their initial introductory offer expires. The alert could be in the form of a text message.
Other measures include:
- Firms having to provide consumers with jargon-free information in the form of ‘summary boxes’, which have been designed by the FCA
- New rules to make it easy for customers to switch to better accounts offered by the same provider, such as making use of the identity information and documents already held and creating simple online switching processes
- Publishing information to highlight firms who pay poor interest rates to longstanding customers.
Christopher Woolard, Director of Strategy and Competition at the FCA, said: ‘In a good market, providers should be competing to offer the best possible deal. Consumers should expect the information they need to shop around to be clear and easy to understand. When they wish to move accounts, they should be able to do so with the minimum of fuss.
‘Our package of measures are all about giving consumers the information they need to make an informed decision about what to do with their savings, and the ability to act on it quickly.’
The FCA is seeking feedback on these proposals and is expected to confirm finalised rules later this year.
They intend for the rules to come into force in 2016, and the FCA is also working with the savings industry to deliver seven day switching for the vast majority of cash ISA transfers from January 2017.