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Banks to have single easy-access savings rate on old accounts under new proposals announced today

Banks to have single easy-access savings rate on old accounts under new proposals announced today

Banks will have to set their own single interest rate across all their easy-access accounts that have been open for longer than a year, under proposals unveiled by the financial watchdog today.

Under the plans, savings account providers would be able to offer multiple introductory interest rates for up to 12 months. But after this, they'd have to choose one single rate for their easy-access cash savings accounts, and one for their easy-access cash ISAs.

Firms would also need to publish their single easy-access rates, alongside the percentage of the balances held in easy-access accounts on this rate. They'd also need to highlight the highest introductory interest rate they offer on an easy-access cash savings account and an easy-access cash ISA.

The Financial Conduct Authority (FCA) estimates that interest rates for the most competitive part of the market would drop "very slightly" as a result of the proposed changes, but that rates for longstanding customers would rise.

It says research found that only about 10% of easy-access cash-savings and cash-ISA customers switched in the last three years.

The FCA is running a consultation on its plans, which is due to end on 9 April 2020. It hopes to have providers bring in their new single easy-access rates from April 2021.

See our Top Savings Accounts guide for rates of up to 1.4% easy access or up to 2.38% fixed.

Martin: 'This won't be a revolution'


For years, savings accounts have operated a suck, slap and flog technique. They suck people in with a decent rate, slap that rate down as soon as they can, then try and flog new accounts with similar names at a higher rate. Over the years this, combined with customer inertia and misplaced loyalty, has led to millions of people with cash in old accounts paying spitworthily low rates.

Anything that tries to tackle this, without curbing the flow of decent new rates for those who actively manage their savings, is positive. The FCA's single easy-access rate won't be a revolution; it won't mean people automatically earn more. It'll simply mean that there's one set rate for all antiquated savings accounts. And as the banks are free to set that rate themselves, it could still be lower than a limbo dancer's belly.

Yet it isn't without merit. It should mean it will be far easier for anyone with an old account to find their rate. It'll also make it easier for me and others to shine a light on the poverty of interest many banks pay loyal savers – this can then be used as a clarion call to urge more people to ditch and switch, and to expose poor-paying banks to try and heap pressure on them to improve.

But, while the FCA believes this will boost rates for those who never switch, it also believes it's likely to reduce rates on the most competitive accounts, which would penalise those who regularly move their savings to maximise interest.

There's also the concern that some savings providers currently have rates that stay higher for longer than a year. There needs to be a carve-out in the regulation to let providers do this, rather than making every provider push rates down to the single easy-access rate after 12 months – a point we'll make clear to the FCA.

What does the FCA say?

Christopher Woolard, the FCA's executive director of strategy and competition, 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 long-standing 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."