The FCA has pledged to take further action over cash savings accounts after admitting attempts to improve switching have not worked.
The regulator first conducted a market study into cash savings in 2015, which concluded that savings held with banks for a significant amount of time were paying lower interest rates than fresh accounts, there was a lack of transparency over the options available, and that there were significant barriers to switching between providers.
Finding that the large current account providers had advantages over smaller providers, even though they offered worse rates, the FCA introduced new disclosure requirements, forcing firms to provide a more accessible snapshot of account information, as well as signing an agreement with the industry that a minimum of 80 per cent of cash ISA transfers will be carried out within seven working days.
Board minutes released by the regulator today, however, show that customers are still losing out when it comes to cash savings. The regulator plans to publish a further discussion paper and collect more information before finalising further proposals to benefit consumers.
The minutes read: “The board was reminded that the 2015 cash savings market study identified some harms for which a number of remedies aimed at improving how customers can open, manage and switch their accounts, had been implemented. These harms were not fully addressed by the remedies implemented, additional remedies are therefore being proposed to address the outstanding harm. The board noted that the proposals follow the testing of remedies to improve switching which did not succeed.”
The FCA board also discussed its ongoing work over British Steel pension transfers, calling for “consistency” across advice firms.
The minutes read: “All relevant firms had been written to summarising the work which has been undertaken and some requesting relevant data. It was pointed out that where the same issues were arising in other advisory firms there needed to be consistency in the approach to managing the issues.”