Financial watchdogs are planning a shake-up for the cash savings market because they believe banks, building societies and other providers are failing to offer customers a good deal.
The Financial Conduct Authority (FCA) has spent six months looking at cash accounts for savers and concluded offers like easy access accounts and cash ISAs do not pay good returns and that customers do not have enough information to switch accounts to earn more interest.
“These are interim findings and the FCA has not yet decided whether to take any action to improve competition or fine providers,” said an FCA spokesman.
Market could work better for savers
“We definitely consider some parts of the market are not working in the best interests of consumers.”
The FCA report found:
- Savers do not shop around for the best deals – and providers take advantage of this inertia by offering a higher initial rate on new accounts than on older accounts
- Savers tend to stick with their banking provider rather than move between providers to attract better rates
- The big high street banks hold the most in cash savings, leaving new providers with a hard job in attracting a market share even if their products are better
The final report is due later this year, said the FCA
Warnings about bogus advisers
The FCA has also issued these warnings about bogus firms posing as regulated financial advisers:
Dealing with an unregulated firm
If you buy shares, save money or invest with an unregulated firm, you lose any protection offered by the Financial Ombudsman and the Financial Services Compensation Scheme. Broadly, you have no independent place to complain if the deal goes wrong and are unlikely to win any compensation.
Checking if a firm is regulated
Go to the Financial Services Register to check if a firm is regulated in the UK.
Reporting a suspected bogus adviser