UK: FCA announces basic savings rate plan

The Financial Conduct Authority (FCA) has suggested a Basic Savings Rate (BSR) for instant access savings accounts as well as cash ISAs.

This would require financial institutions to set their own BSR across these accounts once they’ve been opened for a certain period.

The FCA would then publish these rates on its website to allow customers to compare the products, in an attempt to treat savers fairly so that loyal customers do not lose out on returns compared to those who shop around.

The FCA’s Executive Director for strategy and competition, Christopher Woolard, added: “This is why we are considering the introduction of a basic savings rate for older accounts, which would promote competition and help get customers a better rate of interest”.

The FCA claims that this action will allow transparency and competition across providers, and it will help consumers make decisions about remaining or switching their providers.
 
RFi Group data shows that savers who have switched their primary savings account in the last year receive a rate of 2% on average, as opposed to customers who have not switched in the past 3 years receiving an interest rate of 1.1% on average.

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