Providers urged to be clear on rates

In a 194-page report, Cash Savings Market Study, which outlined the regulator’s final findings on clarity and choice in the £700bn UK cash savings market and proposed remedies to help consumers, the FCA backed away from banning introductory offers.

However, the FCA said: “Providers need to improve the transparency of their practices, with little information currently being given to consumers about alternative products.”

The regulator put forward several remedies, such as better information from providers, which it said could lead to greater consumer awareness of interest rates, more shopping around, easier switching and competition focused on an industry retaining customers by offering better deals.

The FCA also issued a 35-page Occasional Paper, Stimulating Interest: Reminding Savers to act when rates decrease’, in which the City watchdog claimed that providers had taken advantage of people’s lack of memory or inertia, and not presented clear reminders to customers that their rates were about to change.

Michael Ruck, former FCA staff member and now a senior financial services enforcement lawyer at City law firm Pinsent Masons, said: “Only time will tell if he FCA’s approach will lead to the withdrawal of higher introductory rates.”

Adviser view

Danny Cox, financial planner at Bristol-based Hargreaves Lansdown, said: “As proven with most financial products, the more active people are in reviewing their accounts and shopping around, the better the deal they will get on their savings.

“Using the larger institutions for your current account and savings will cost interest but have the added benefit of convenience and security so savers need to decide what is most important to them.”