Firms will have to set a single easy access rate (SEAR) across all easy access accounts, under plans put forward by the Financial Conduct Authority (FCA).
Under the plans, firms will have flexibility to offer multiple introductory rates for up to 12 months, then will need to choose one SEAR for their easy access cash savings accounts and one for their easy access cash savings ISAs.
The FCA has previously raised concerns that competition is not working well for many of the 40 million consumers who hold either an easy access savings account or easy access cash ISA. It added that many longstanding customers currently receive poor outcomes and the FCA wants firms to focus more on these savers.
The FCA’s said its proposals aim to improve competition in the market, encouraging firms to increase the interest rates they offer as well as protecting those consumers that currently receive the lowest interest rates. The FCA estimates that consumers will benefit by £260m from higher interest payments.
Christopher Woolard, executive director of strategy and competition at the FCA said: “Competition is not working well for many of the 40 million consumers with easy access savings accounts and we want that to change. Our proposals would mean firms have a single rate for customers immediately after their accounts have been open for 12 months. Firms will choose the rates they offer, and the rates they offer will have to be clearly published.
“This will prevent firms from gradually reducing interest rates over time and make them compete for all their customers. We are concerned that many longstanding customers are seeing a poor outcome and we want firms to focus more on these customers. The new rate will also make it easier for savers to know whether they are getting a good deal after any introductory offer has expired.”