Customers of 21 cash account providers could be better off by switching, new data from the Financial Conduct Authority (FCA) has shown.
The FCA's third and final set of its ‘sunlight remedy’ data published on 1 December, showed 21 of 32 providers were offering interest rates of a mere 0.1% or less on both open and closed savings accounts.
However, the data, correct as of 1 October, also showed two of the providers were offering rates of 1% or more, with the median lowest interest rate being higher on open accounts than closed accounts in all of the accounts studied.
While the data deliberately focuses on the lowest possible rate and as such does not represent the interest rate every consumer is earning, the FCA said it showed consumers could be better off by opening a different savings account.
Stricter rules take effect
The FCA findings were published as the regulator introduced new rules on cash accounts and cash ISAs, which force firms to provide "easy to understand" upfront information about rates to help consumers compare savings accounts.
Firms will also have to remind consumers about changes in interest rates or the end of an introductory rate, as well as provide quicker and easier switching processes.
"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," FCA executive director of strategy and competition Christopher Woolard said.
"Our sunlight remedy data shows that some consumers could be better off by opening a different account."
He added: "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."
In December 2015, the FCA committed to publish an industry target for seven-day cash ISA switching.
It wanted a minimum of 80% of cash ISA transfers to be carried out within seven working days. Currently approximately 66% of all transfers are completed in that time frame.
Tax Incentivised Savings Association chief operations officer Carol Knight said: "It's encouraging that the FCA notes that approximately 66% of Cash ISA transfers already take place within seven days. However, we recognise that further improvements can be made and will continue to work with the industry, regulators and HM Revenue & Customs to bring this about."
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