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.
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:
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.
Please send us your comments by 1 October 2020.