The Financial Conduct Authority (FCA) has 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.
This 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.
New rules have 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.”
The FCA said that 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.
- The median lowest interest rate is higher on accounts that cannot be managed in branch, compared to those that can.
This is the third and final set of trial data for the sunlight remedy which is aimed at delivering better outcomes for customers of cash savings accounts. The FCA will now evaluate the effectiveness of this remedy and consider whether to introduce this disclosure, or other remedies into handbook rules.
In a Policy Statement published in December 2015 (PS 15/27), the FCA committed to publish an industry target for seven day cash ISA switching. The British Bankers Association, the Building Societies Association and Tax Incentivised Savings Association have agreed that from next year, a minimum of 80% of cash ISA transfers will be carried out within seven working days. They have also committed to carry out a study on improving this further.
The FCA says it will continue to work with industry on improving the speed of transfers and also consider the need for any broader regulatory intervention across the savings account market to improve switching. The FCA previously noted that approximately 66% of all transfers were being completed within seven days. The industry will publish details of its performance against the target quarterly, starting in April 2017.