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.”