This consultation sets out proposals to make the market simpler and improve competition. This will help consumers know if they are getting a good deal, as well as protecting those that currently receive the lowest interest rates. We want firms to focus more on how they treat their longstanding customers.
Our proposals are designed to maintain competition on new savings accounts by allowing introductory rates for up to 12 months. They will also ensure competition brings benefits for longer-standing customers by creating a single interest rate no later than the date immediately after 12 months of the account being opened. Our proposals would require firms to introduce a Single Easy Access Rate (SEAR) for their easy access cash savings accounts, and a SEAR for their easy access cash ISAs.
Why we are changing
We have found there is price discrimination in the easy access cash savings and cash ISA market. This leads to longstanding customers suffering harm by receiving poorer outcomes than new customers. So we propose to require firms to:
- introduce a Single Easy Access Rates (SEAR), which is a single interest rate set by a firm for their easy access cash savings accounts, and a further rate for their easy access cash ISAs no later than the day after the first anniversary of the opening of the account, and
- publish clear data on their SEARs so that third parties such as intermediaries and media organisations can highlight the rates between products and providers more easily.
Who this applies to
- firms that provide cash savings products and their trade bodies.
- Our proposals will also be of interest to consumers of cash savings products, consumer organisations, and intermediaries such as financial advisers and price comparison websites.
Background to this consultation
Our Cash Savings Market Study (CSMS) found that the market is not working effectively for many consumers, particularly those with easy access cash savings account or easy access cash ISAs.
Our Discussion Paper (DP18/6) set out a range of potential interventions to address the harm in this market. Alongside this we published an Occasional Paper, which set out modelling on introducing a Basic Savings Rate (BSR). This consultation considers the feedback we received, and our response in the proposals we are now consulting on.
Respond to our consultation
Please send us your comments by 1 October 2020.
17/03/2020: Information changed Consultation closing date extended
09/01/2020: Information added Page updated from DP18/6 to CP20/1
14/05/2019: Editorial amendment Updated text and next steps