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FCA announce new proposals which could mean savers are £260m better off

A look at the FCA’s proposals for reform of the easy access cash savings market.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

The Financial Conduct Authority (FCA) has announced proposals to reform the easy access cash savings market.

The proposals would mean banks and building societies have to offer a ‘single easy access rate’ (SEAR) across all easy access accounts. They will still be able to offer introductory rates for up to a year, but they will then have to revert to one SEAR rate for easy access accounts and one for their easy access cash ISAs.

Tackling inertia

40 million savers have either an easy access savings account or an easy access cash ISA and the FCA say that competition is not working well for many of these people.

Savings providers will often entice savers in with an introductory offer, only for that to end and their savings drop on to a new rate that’s far lower. In fact, the average instant access account offers just 0.41% including unconditional bonuses, but it’s often far less.

The most loyal savers who have had their cash with their bank for a long time are likely to be on some of the lowest rates, and it’s this group that the FCA is looking for providers to focus on. The regulator wants to improve competition in the market and estimates that consumers will be £260m better off from higher interest rates as a result.

At this stage these are just proposals from the FCA and we don’t have any detail on how providers will respond. If providers are forced through competition to raise the rate they offer longstanding customers, does this mean the money will be recouped through lower headline or introductory rates?

The news comes on the same day that Bank of England Governor, Mark Carney, said that interest rates could be cut if it looks like weakness in the economy will persist.

What could this mean for savers?

At this stage, we don’t know if the proposals will be implemented. However, it does highlight the issue of doing nothing with your cash. If you think your savings could be working harder for you, we can help.

An easy way to get great returns on your savings

Active Savings makes it easy to get great returns on your savings. You can pick and mix easy access and fixed term savings products from a range of banking partners. And it’s all managed through the convenience of one online account, with one login, and no paperwork and no hassle.

So why not get your savings into gear in 2020, and start Active Saving today?

This article should not be viewed as personal advice.

Discover more

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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