Today sees new rules take effect that will force banks to provide clearer information on interest rates for savers.
The Financial Conduct Authority (FCA) said the measures will help consumers compare accounts and make it easier to switch to another provider.
Providers should be competing to offer the best possible deal to consumersChristopher Woolard
As well as an upfront “summary box” containing key information, the City watchdog said firms will also have to clearly remind savers about changes in interest rates or the end of an introductory rate, and provide a quicker and easier switching process.
Christopher Woolard, executive director of strategy and competition at the FCA, said: “The new rules coming into force today will help consumers get the facts they need to make an informed decision about what to do with their savings.
“In a well-functioning market, providers should be competing to offer the best possible deal to consumers. One of our regulatory priorities is the treatment of long-standing customers and we want to see all customers benefit from competition and innovation in financial markets.”
READ MORE: FCA sheds light on poor savings rates
The move came as the FCA published data showing that some easy-access savings accounts are paying interest of as little as 0.01 per cent – well below the Bank of England base rate of 0.25 per cent. The maximum rate available was 1.15 per cent.
However, Richard Theo, the chief executive and co-founder of online investment service Wealthify, said the FCA’s steps were “not enough” in the current low interest rate environment.
He said: “The intention behind it is great. Educating consumers and showing them that their money could be working harder for them is crucial. It’s the focus on cash savings accounts that are the problem.
“There is an estimated £700 billion tied up these types of accounts but with inflation and low interest rates, money in cash savings accounts is eroding over time, not growing. To shore up people’s financial futures the FCA needs to focus on educating Britain on the alternatives to cash savings accounts.”