£160 billion cash held in onshore savings accounts was earning interest at 0.5% or less in 2013 – and confused investors often do not know how much banks and building societies are paying in interest rates.
As a result, one in eight savers has not switched accounts in the past three years, says the Financial Conduct Authority (FCA).
The financial watchdog believes savings providers should make switching accounts easier and tell customers what rates their cash is earning.
The FCA’s director of strategy and competition Christopher Woolard said: “In a good marker, savings providers should compete for customer deposits and make the information available they need to make good financial decisions.
“That’s why we want to make the market more dynamic and competitive to better serve the interests of savers.”
The FCA study revealed older savings accounts tend to pay less interest than newer accounts.
As a result, the FCA is asking providers to give clearer and timelier information about rate changes to customers; including telling customers the lowest rates they receive on savings.
The watchdog also wants the time to switch an account reduced and customers to have better access to managing their money.
Introductory bonus rates will not be banned, but savings providers will have to explain how they work and tell customers when lower rates kick in.
The FCA is also asking providers to review their product ranges with a view to reducing the number of accounts so customers can make simpler decisions about their finances.
Warnings about bogus advisers
Here are the latest bogus financial advisers listed on the Financial Conduct Authority (FCA) web site:
- Quick Loan Finance
- Avante Corp LLC
- Lloans Direct (clone web site)
- Easy Loans Limited (clone web site)
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