FCA acts to help customers get better rates for cash savings
The Financial Conduct Authority (FCA) has this week issued proposals to reform the easy access cash savings market. In very simple terms the aim is to stop loyal customers that may only have a few pounds or indeeds hundreds or thousands of pounds simply left in old accounts have interest rates after any offers have expired as low as 0% to 0.1% to 0.2% pa.
Banks will now be required to set a Single Easy Access Rate (SEAR) across all easy access accounts. Think of this like a standard interest rate in teh same way as they offer SVR standard variable rates on mortgages when a mortgage period, term or fixed rate deal expires.
Banks can offer multiple introductory rates for up to 12 months, then they will need to choose one SEAR for their easy access cash savings accounts and one for their easy access cash savings ISAs.
The FCA is concerned that competition is not working well for many of the 40 million consumers who hold either an easy access savings account or easy access cash ISA. Many longstanding customers receive low rates and in our opinion this will force banks to treat existing customers in a better manner.