Banks will soon be forced to give savers clearer information about easy access savings account interest rates something MoneySavingExpert.com has argued for for years after the financial regulator approved a package of measures to be introduced in December 2016.
The Financial Conduct Authority (FCA) today unveiled its final plans to boost competition, encourage easier and quicker switching and improve the information savers receive and also named and shamed 32 providers which currently offer the lowest interest rates, with some paying 0%.
As part of a new raft of measures for easy access cash savings accounts and easy access cash ISAs which will come into effect on 1 December 2016, the FCA has told banks they must:
- Clearly show key info at the point of sale: Firms must display key information including interest rates in a product summary box.
- Show clear information on interest rates: Firms will be required to display interest rates prominently alongside account balance information in all rate-related customer communications including statements.
- Enable quicker and easier switching: Firms will be required to provide a "prompt and efficient service" so that customers can switch to better accounts offered by the same providers.
The FCA is already planning to bring in seven-working-day switching for the majority of cash ISA transfers from January 2017, as is already the case with current accounts. At the moment guidelines state cash ISA switching should take no longer than 15 working days.
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Banks offering lowest rates named and shamed
The FCA has also today published data on the 32 largest providers by number of customers (39 banks and building societies in total) offering low interest rates to "shine a light" on the figures it plans to keep publishing this information on a trial basis for 18 months, at six-monthly intervals.
The data shows that (as of 1 October) rates on some easy access accounts were as low as 0% at First Direct and HSBC, and 0.01% at Ulster Bank, Danske Bank and Progressive Building Society.
Here are the accounts paying the lowest interest rates:
|Cash savings managed in branch||Cash savings not managed in branch||Cash ISAs managed in branch||Cash ISAs not managed in branch|
|Open accounts||Closed Accounts||Open accounts||Closed accounts||Open accounts||Closed accounts||Open accounts||Closed accounts|
|Danske Bank 0.01%||Danske Bank 0.01%||Danske Bank 0.05%||First Direct and HSBC 0.0%||Santander 0.10%||Marks & Spencer 0.05%||Sainsbury's Bank 0.50%||Newcastle Building Society 0.25%|
|Ulster Bank 0.01%||Skipton Building Society 0.01%||First Direct 0.05%||Ulster Bank 0.01%||First Trust Bank 0.25%||Bank of Scotland 0.10%||West Bromwich 0.50%||Bank of Scotland 0.50%|
|Progressive Building Society 0.01%||Ulster Bank 0.01%||HSBC 0.10%||Bank of Scotland 0.10%||Danske Bank 0.40%||HSBC 0.20%||Co-op 0.65%||Nationwide 0.50%|
|HSBC 0.05%||Progressive Building Society 0.01%||OneSavings Bank 0.10%||Barclays 0.10%||Bank of Scotland, Co-Op, NatWest, Newcastle BS, RBS, TSB, Ulster, West Bromwich 0.50%||Halifax, Lloyds Bank, Nationwide, Newcastle BS, Virgin Money 0.25%||Tesco Personal Finance 0.75%||Leeds Building Society & OneSavings Bank 0.75%|
(i) As at 1 October. Closed accounts are those which were still operated but not open to new customers on 1 October 2015.
'Clarity over interest rates will leave many people shocked at how little they're earning'
Martin Lewis, founder of MoneySavingExpert.com, says: "Finally savers will be told on their statements quite how little they're earning a good thing yet somewhat risible how long it's taken. We first called for it a decade ago and it's still not actually going to be within the regulations until December next year. The excuses from the banks have been pitiful over the years, such as 'we don't have the technology', a staggering piece of nonsense considering they can tell you how much interest you earn, but would need 'new technology' to list the rate used to calculate it.
"A clarity over interest rates will leave many people shocked about how little they're earning. Hopefully that in itself will encourage them to act. Yet what people want is a place to put their cash, so it earns decent interest for the long term and they can access it when they need. Yet frankly that doesn't exist. The only way to earn real savings interest is to be a savings tart chucking what you've got where it pays best and disloyally moving your money again and again to ride the wave of best buys. Do that right now and interest as high as 6% is possible, not the paltry sub 1% rates most people are earning.
'In a good market, providers should be competing to offer the best possible deal'
Christopher Woolard, director of strategy and competition at the FCA, says: "With many savers never switching because they don't think it will make a difference, our rules will help consumers get the information they need to shop around.
"In a good market, providers should be competing to offer the best possible deal and should a consumer wish to move accounts, they should be able to do so with the minimum of fuss.
"Our rules are about giving consumers the facts they need to make an informed decision about what to do with their savings, and the ability to act on it quickly."