Firms selling fixed-term bonds have made changes to their contract terms and business practices after a Financial Conduct Authority investigation found a number of failings in the sector.
The FCA launched a thematic review into the automatic renewal of fixed-term savings bonds after consumers’ complaints.
The review investigated 30 firms and found 16 operated auto-renewal policies where the FCA found issues around contract terms and company practices.
The regulator says customers were unhappy firms appeared to be relying on automatic renewal terms they felt were unfair. Customers were finding they were locked up in a new bond for a further fixed period instead of their funds being accessible on maturity.
Firms agreed to end a series of practices which may have breached treating customers fairly principles such as altering contracts mid-term, giving short cooling-off periods, short notice of changes and poor communication of consumer opt-out rights.
The regulator will follow up the investigation with an update in 2014 and is also conducting thematic reviews into the auto-renewal of home and motor insurance.
Informed Choice managing director Martin Bamford says: “The terms associated with fixed-term bonds tend to be very lengthy and difficult for the client to understand in some cases. As an industry, we need to stop making assumptions about what is best for clients and get them more involved in the decision-making process.”