Martin Lewis says FCA’s single easy access rate proposal is positive, but won’t be a revolution for savers
The Financial Conduct Authority has today proposed that banks will have to set a single rate across all easy access accounts. Savings account providers would be able to offer multiple introductory rates for up to 12 months, but then they will have to choose one single easy access rate for their easy access cash savings accounts, and one for their easy access cash savings ISAs.
Martin Lewis, founder of MoneySavingExpert.com, said: “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.”