Savers could get texts or email alerts when rates drop
If the interest rate on your easy access savings account or ISA falls you could soon be sent an email or text alert, under plans set out by the financial regulator.
The Financial Conduct Authority (FCA) is introducing a series of new measures from December this year to ensure savers are given clearer information.
As part of that, banks will have to provide easy-to-understand info in a summary box to help you compare accounts, and clearly remind you about changes in interest rates or the end of an introductory rate. They also will be required to provide a quicker and easier switching process.
While the FCA hasn't yet decided if banks will be required to send savers texts or emails when rates drop, it this week unveiled the results of a series of trials with 130,000 consumers looking at ways of encouraging them to switch savings account. It found consumers were broadly in favour of digital reminders and these were at least as effective as letter reminders.
The plans come as the FCA released its second set of data showing the lowest interest rates paid by 32 easy access cash savings accounts and easy access ISAs. As of 1 April some easy access savings accounts – at First Direct, HSBC and the Post Office – were offering a rock-bottom 0%.
See our Top Savings Accounts and Top Cash ISAs guides for how to get the best possible interest rates on your money.
What did the FCA's trials show?
The FCA has told the banks it regulates they must improve disclosure – ie, ensure customers are fully informed about their products. However, it hasn't yet stipulated exactly what this will mean in practice.
In its trials the FCA tested a number of possible remedies:
Digital reminders. To test how reminders about interest rate changes sent by email or text stacked up next to the traditional method of letter-based reminders.
A switching box. Provided periodically to customers giving information on the potential financial gains from shopping around and switching, prompting customers to consider their choice of account and provider.
A return switching form. A very simple 'tear-off' form and pre-paid envelope allowing a customer to switch to a better paying account offered by their existing firm more easily.
The findings of the trials showed that consumers generally favoured digital reminders, but that the switching box and return switching form only sparked switching within the same bank rather than to other providers, although they had some positive effects.
The FCA will now investigate alternative options to encourage more switching among consumers. It will report on these findings at the end of the year.
Banks offering lowest rates named and shamed
The FCA also this week published data naming and shaming providers offering low interest rates. It's the second time the regulator's published the rates, and it plans to keep publishing this information on a trial basis for another 12 months, at six-monthly intervals.
The lowest-paying accounts
| 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 |
| Post Office 0.00% | Post Office 0.00% | Danske Bank 0.05% | First Direct 0.00% | Santander 0.10% | Marks & Spencer 0.05% | Sainsbury's Bank 0.50% | Halifax 0.25% |
| Danske Bank 0.01% | Danske Bank 0.01% | First Direct 0.05% | HSBC 0.00% | TSB 0.20% | Bank of Scotland 0.10% | West Bromwich 0.50% | Newcastle Building Society 0.25% |
| Ulster Bank 0.01% | Ulster Bank 0.01% | HSBC 0.10% | Ulster Bank 0.01% | First Trust Bank 0.25% | HSBC 0.20% | Co-op 0.65% | Post Office 0.25% |
| First Trust Bank0.05% | First Trust Bank 0.05% | One Savings Bank 0.10% | Co-op 0.06% | NatWest 0.25% | TSB 0.20% | Tesco Bank 0.75% | Bank of Scotland, Nationwide, Sainsbury's Bank 0.50% |
| HSBC 0.05% | HSBC 0.05% | Bank of Scotland, Halifax, TSB 0.20% | Bank of Scotland, Barclays, One Savings Bank, Sainsbury's Bank 0.10% | Danske Bank 0.40% | Halifax, Lloyds Bank, Nationwide, Newcastle Building Society, Virgin Money 0.25% | Santander 0.80% | Leeds Building Society, One Savings Bank, West Bromwich Building Society 0.75% |
| As at 1 April 2016. Closed accounts are those which were still operated but not open to new customers on 1 April. | |||||||
What the FCA says
Christopher Woolard, director of strategy and competition at the FCA, says: "We said that one of our priorities this year will be focused on the treatment of long-standing customers. Our new rules, coming into force at the end of the year, 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 [which, according to the FCA, 'shines a light on firms' strategies towards their long-standing customers'] shows that some consumers could be better off by opening a different account."
Share this guide?
10 September 2024
Clever ways to calculate your finances
