Tuesday, 20 January 2015

New weapon to boost savings rates

The financial watchdog the FCA is barking and growling at banks over the way they let down customers over savings rates.

In too many cases the saver is left languishing on a pitiful rate, given little information on how bad it is and seldom encouraged to shop around for something better.

So the FCA has devised a shiny new weapon to cow savings providers into behaving better. When they write to you with a regular statement they will have to include a "switching box" which shows in a colourful chart how bad your rate is, how much more you could get from the provider's other accounts and what you could earn from the average of the best ten savings accounts on the market.

Here's what the box could look like:

Another innovation is that when you get the account in the first place they'll have to include a warning if the rate is a poor one, saying it pays "interest below the bank of England's base rate".

The watchdog has retreated with a whine and a lowered tail from drastic measures such as banning the introductory bonus rates which makes accounts seem attractive at first but leave you stuck on a measly rate later.

But the switching box could be a big embarrassment for banks and building societies which take advantage of gullible customers.

All the measures are up for consultation.

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