FCA demands seven-day cash Isa switching by 2017

FCA demands seven-day cash Isa switching by 2017

Under new proposals announced by the Financial Conduct Authority switching cash savings accounts will become quicker and easier, as it asks the industry to deliver seven-day switching for the vast majority of cash Isa transfers from 2017.

Today (23 July) the regulator said it will introduce a series of new rules that will force firms to provide clear information on the interest rates on their cash savings products as well as clearly alerting consumers to changes in interest rates, or the end of an introductory rate for example.

The new measures are in response to the FCA’s market study into competition in the cash savings market which concluded that it should be easier for consumers to compare cash savings accounts and then switch providers if they wish.

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Earlier this year, the market study found around £160bn of funds held in easy access savings accounts earned an interest rate equal to or less than the Bank of England base rate of 0.5 per cent in 2013.

Consumers polled by the study found it difficult to know what rate they were on, or were put off switching by the expected inconvenience.

Eight out of 10 easy access accounts have not been switched in the last three years, according to the research, but simple changes in the timing and content of communications to customers could significantly increase shopping around.

Included in the FCA’s measures is removing complex jargon and helping customers understand their options, being clear on what interest consumers are getting, quicker and easier switching and seven-day switching for cash Isas and, finally, making it clear which firms pay the lowest rates.

The FCA said that it intends for the rules to come into force in 2016 and is seeking feedback on the these proposals, with an expectation to confirm finalised rules later this year.

Christopher Woolard, director of strategy and competition at the FCA, said: “In a good market, providers should be competing to offer the best possible deal.

“Consumers should expect the information they need to shop around to be clear and easy to understand. When they wish to move accounts, they should be able to do so with the minimum of fuss.

“Our package of measures are all about giving consumers the information they need to make an informed decision about what to do with their savings, and the ability to act on it quickly.”