Cash savings market study

Published: 08/07/2014   Last Modified : 20/11/2014
In October 2013, we launched a market study under our competition objective focused on the cash savings market. We wanted to assess whether competition in the market for cash savings products is working well for consumers.

This report sets out the interim findings of our cash savings market study. In it we set out our initial observations on the nature of competition in the cash savings market. We have not yet reached firm views on the nature of any competition issues or on market interventions that could be made. These will follow in a final report which we aim to publish in January 2015.

The scope of our study

The cash savings market study focuses on interest bearing cash savings accounts. Our interim findings focus primarily on easy access accounts and no-term cash ISA accounts, which account for around two-thirds of total cash savings balances held by firms in our sample. The final report will include analysis of the other products covered by the study.

We looked at consumer behaviour, including:

  • Whether consumers shop around and switch their savings accounts and how often
  • What factors might reduce the willingness of consumers to shop around and switch their savings accounts, including consumer awareness of interest rates, ease of switching and gains from switching

We examined supplier conduct, including:

  • Firms pricing in relation to newer and older accounts
  • The relationship between the provision of cash savings products and the provision of personal current accounts
  • The information firms provide to their existing and potential customers.

Our findings so far

The emerging evidence suggests that while some aspects of the cash savings market are working well for consumers; some aspects of the market are not working well:

  • Most savers don’t shop around, allowing providers on average to pay lower interest rates on older accounts than on accounts opened more recently
  • Many people save with their personal current account (PCA) provider, despite the fact that the largest PCA providers on average pay lower rates than other providers
  • This lack of switching by customers, combined with the high proportion of savings balances held by PCA providers, makes it very difficult for so-called challenger banks to gain market share and attract balances at a similar cost to the larger providers.

MS14/2 Cash savings market study: interim report

Next steps

We’ll gather more information from providers and consumer organisations, and will look at the full range of cash savings products.

We’ll consider whether to intervene in this market.

We'll publish our final report in January 2015.

Find out more

For more information see:

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