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FCA reviews £1trn cash savings market and considers annuities study

The Financial Conduct Authority is launching a study into the £1trn UK cash savings market as part of a competition review, and is considering whether to carry out a review into competition in the annuities market.

The study will be part of a programme of work where the FCA will look across financial services markets and assess whether or not competition is working effectively in the best interests of consumers.

The cash savings study will look at a range of issues including the effects of “teaser rates”, the introductory interest rates offered to new customers, and account switching.

The regulator says it will look at whether a market study into competition in the annuities market is needed towards the end of the year.

The FCA says market studies enable it to examine competition in a market, assessing how consumers and firms behave and interact.

The regulator will also call for evidence early next year as part of a strategic review to look at the way competition works between firms in financial services.

The FCA was handed a duty to promote competition in financial services when it came into force in April.

FCA chief executive Martin Wheatley says: “Promoting effective competition and ensuring that markets work well for consumers is a key objective for the FCA.

“We will be undertaking a programme of work and research that will enable us to have a better understanding of how the markets are working and the dynamics that drive both them and the decisions that consumers make.

“In looking at cash savings, we will examine an area that affects most people and see if there is action we need to take. This is exactly the sort of area I want the FCA to be operating in.

“We know that switching rates are low for financial services products and savings accounts are no exception. Even when people do switch their accounts, they are twice as likely to go with their existing provider than move to the offering of a competitor.”

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Comments

There are 11 comments at the moment, we would love to hear your opinion too.

  1. The regulator is looking the wrong way again.
    Cash is good but equities are better for long term savings.
    Why does it take 15 minutes to take out a 3000% APE loan and 4 hours to do a compliant £50 per month equity ISA saving plan.
    Regulation, Regulation and more regulation!!!.
    As per last weeks complaints statistics there were 220 upheld complaints from all the large networks in TOTAL over 6 months…..where is the regulatory dividend for all these compliant firms that are proven to give fantastic advice and customer service resulting in such low complaint numbers compared to the Banks, Utilities, Motor and service industries.

  2. What a bleedin’ waste of time. Competition in the cash market with interest rates at all-time lows! What is the cost benefit analysis of finding another 0.01% interest for clients? Do they have so little to do at Canary Wharf that they have to waste our money doing this sort of review – or have they promised E&Y or PWC another cushy piece of work in order to secure their future employment?
    If they really want to do something about cash accounts – go and tell Carney to put up interest rates.

  3. Derek Bradey ceo Panacea Adviser 9th September 2013 at 11:27 am

    Mr. Wheatley states “Promoting effective competition and ensuring that markets work well for consumers is a key objective for the FCA” and he is correct.

    But in saying “We will be undertaking a programme of work and research that will enable us to have a better understanding of how the markets are working and the dynamics that drive both them and the decisions that consumers make” would suggest that after years and years of regulation, collection of data, reviews and miss-selling scandals, that they have no idea.

    Another regulatory exercise to justify existence? If the FCA cannot understand how markets are working and have been working by now, there is no hope.

    In looking at the way competition works between firms in financial services I think the FCA needs to understand that competition is based on innovation. With innovation comes risk and risk is not something that regulation sees consumers should be exposed to if it means downside.

  4. Dead right Harry. its just another job for the boys. Why now with interest rates at an historic low for the past 5 years!!!
    Andy’s also on the money.Try complaining to the likes of Sky or any of the other virtual monopolies and they don’t give a dam. They know you cant go anywhere else without spending hours sorting out the transfer of your business to another virtual monopoly anyway.
    The likes of Wonga are laughing all the way to the bank as the state owned banks have let the owners, “the public” down in withdrawing lending to the masses.

  5. Another review…. and another … and another… et al. It would be a joke if it wasn’t so sad.. Well I guess we pay them those exorbitant salaries, so they have to do something with their time..

    Wonder what’s next. Guess in 5 years time, they run out of original ideas and re-review the review of the review they carried out 5 years before and see if it needs reviewing.

    How on earth did we survive so many years without the beneficial help of the FSA there as our mentors, overseers and guides… We certainly could not have done it without them!! The reviews that is!!!! Good ole nanny!!

    How did we survive all those years with Lautro and

    Any bets on what they will think up next….??

  6. Any bets shiela nicoll will be working on these reviews from her position within E&Y.
    We will still paying for all the ex regulators one way or another

  7. Disagree with those who say the banks shouldn’t be reviewed. They’re well know for drawing people in with high rates, then dumping the rates after a year or so, and keeping their customers due to human inertia.

    And why not do it now? A review would take a year no doubt, and a couple of years until things were actually changed…by which time interest rates are likely to be rising again.

    Besides, if the FCA is busy with the banks, it will have less time to meddle with the advisor community!

  8. Waste of money, waste of time !!

    If I was being cynical I would say, do you really have this much time and cash to be doing this kind of housekeeping ?

    If you have then some-one really needs to be looking very closely at the FCA

  9. Why would banks offer any more interest when they have provided £ euros and dollar liquidity at very low rates from the central banks! Does the FCA know what they are doing!

  10. Are these people for real?

    The BoE base rate is at an all time low so what do they expect.

    Annuity rates have been impacted by Government policy that have forced yields on bonds down and EU legislation removing gender specific pricing.

    Doesn’t need millions of our pounds wasted on this to work out what is going on.

  11. Another day another review.

    Oh, and another drain on our resources, thanks Martin.

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