The FCA has warned the cash savings market is not working competitively for many consumers who fail to shop around.
The regulator has today published the interim findings of a study into the cash savings market. It says the unwillingness of some savers to switch providers allows banks to pay lower interest rates to those who stay with the same account for several years.
In addition, the FCA says the largest current account providers are able to attract a large proportion of cash deposits despite offering lower rates on average compared to other providers.
FCA director of policy, risk and research Christopher Woolard says: “Our preliminary view is that while some aspects of the cash savings market are working well, competition does not appear to be working in the interest of many consumers.
“In this market there is a minority of very active, very engaged consumers who regularly change provider to get the best deal. We want to look more closely at what is inhibiting the majority of consumers from getting better deals.”
The regulator says it will undertake further research before deciding whether to intervene in the market.
It will also look at what could be done to ensure more consumers are aware of the interest rates they receive and the rates on other accounts; what information customers are given when rates are changing; and what could be done to make it easier to switch providers.
The FCA will publish its final report on the market in late 2014.