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Banks will be forced to tell savers how much interest they earn Banks will be forced to tell savers how much interest they earn
(35 minutes later)
From next year, banks and building societies will have to make it clear how much interest savers are paid on accounts and tell them if rates drop, such as when teaser rates end, under new rules being introduced by the City watchdog.From next year, banks and building societies will have to make it clear how much interest savers are paid on accounts and tell them if rates drop, such as when teaser rates end, under new rules being introduced by the City watchdog.
The Financial Conduct Authority is also planning to force providers to introduce seven-day switching of cash ISAs by 2017.The Financial Conduct Authority is also planning to force providers to introduce seven-day switching of cash ISAs by 2017.
It was forced to act after its market study into the £700bn cash savings market revealed competition was not working as effectively as it should.It was forced to act after its market study into the £700bn cash savings market revealed competition was not working as effectively as it should.
Christopher Woolard, the director of strategy and competition at the FCA, said: “In a good market, providers should be competing to offer the best possible deal. Consumers should expect the information they need to shop around to be clear and easy to understand.Christopher Woolard, the director of strategy and competition at the FCA, said: “In a good market, providers should be competing to offer the best possible deal. Consumers should expect the information they need to shop around to be clear and easy to understand.
“When they wish to move accounts, they should be able to do so with the minimum of fuss.” "When they wish to move accounts, they should be able to do so with the minimum of fuss."
Under the measures, firms will have to give consumers easy-to-understand key information to help them compare savings accounts. They  will also have to contact  customers, by text message for instance, when a bonus rate ends or fixed-term account expires. Under the measures, firms will have to give consumers easy-to-understand key information to help them compare savings accounts. They will also have to contact customers, by text message for instance, when a bonus rate ends or fixed-term account expires.
At present, savers are left to languish in accounts paying paltry rates when their market-leading promotional rate ends. The marketing gimmick has meant many consumers ending up with pathetic returns.At present, savers are left to languish in accounts paying paltry rates when their market-leading promotional rate ends. The marketing gimmick has meant many consumers ending up with pathetic returns.
Complex jargon which hoodwinks people into the wrong accounts is also to be outlawed and banks and building societies will have to improve their savings switching services for those using online or mobile banking.Complex jargon which hoodwinks people into the wrong accounts is also to be outlawed and banks and building societies will have to improve their savings switching services for those using online or mobile banking.
Andrew Hagger of personal finance website Moneycomms said: “These enhancements are long overdue – providers should have been doing these basics as a matter of course and it shouldn’t have needed the regulator to step in to make it happen.”Andrew Hagger of personal finance website Moneycomms said: “These enhancements are long overdue – providers should have been doing these basics as a matter of course and it shouldn’t have needed the regulator to step in to make it happen.”
He said that providers have, for far too long, increased profitability to the detriment of customers.He said that providers have, for far too long, increased profitability to the detriment of customers.
The British Bankers’ Association, said it would “look at these suggestions from the FCA with great interest”.The British Bankers’ Association, said it would “look at these suggestions from the FCA with great interest”.
Martin Lewis from MoneySavingExpert added: “It is staggering that it’s taken this long before someone finally tells banks they need to clearly tell customers what interest rate they’re getting… The only way to earn real savings interest is to be a savings tart – chucking what you’ve got where it pays best and disloyally moving your money again and again.”Martin Lewis from MoneySavingExpert added: “It is staggering that it’s taken this long before someone finally tells banks they need to clearly tell customers what interest rate they’re getting… The only way to earn real savings interest is to be a savings tart – chucking what you’ve got where it pays best and disloyally moving your money again and again.”
The FCA is expected to finalise rules later this year.The FCA is expected to finalise rules later this year.
The Competition and Markets Authority is also conducting a separate inquiry into competition for personal and small business bank accounts.The Competition and Markets Authority is also conducting a separate inquiry into competition for personal and small business bank accounts.