Savings accounts that pay out the lowest rates of interest are being named and shamed as part of new measures introduced by the Financial Conduct Authority (FCA) to get savers a better deal.
Banks paying ultra-low interest rates to loyal savers have been exposed by the FCA as part of a campaign to encourage customers to shop around for better deals.
The regulator hopes that by highlighting the details of the lowest-paying accounts they will shine “a light on interest rates that are not prominently displayed, but that may be earned by some customers”. The FCA added: “These customers stand to lose out by not switching to a different account.”
From next year, banks and building societies will have to offer clear information on interest rates – displayed prominently alongside a customer’s account balance – and remind savers when these rates decline or when introductory offers expire.
The FCA is also forcing banks to make it easier for customers to switch to a new savings account, under rules which will come into force in December 2016.
It is often the most long-standing customers who suffer the poorest deals. Accounts will often have ‘teaser’ rates – higher rates for the first year or two – which drop back to something much lower if savers do not switch.
The tactic means that savers can often think they’ve safely stowed away their nest eggs to gradually accrue value, only for them to be losing value because the interest offered falls so short of even the rate of inflation.
The FCA looked at the 39 biggest savings brands to produce its figures. The results of the study showed that on some easy access accounts, rates can be as low as zero at First Direct and HSBC, and 0.01 per cent at Progressive Building Society, Ulster Bank, Skipton Building Society and Danske Bank.
With the prospect of a rise to the Bank of England’s base rate at some point in 2016, the chance to make stronger returns on traditional savings accounts is likely to increase at some point in the next year.
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