Banks may soon be forced to offer a minimum interest rate in an attempt to tackle poor returns on customers’ savings.
Under proposals from the Financial Conduct Authority (FCA), lenders may be forced to provide interest rates above a set minimum on easy access savings accounts. The FCA has voiced concerns over the low returns that many loyal customers have been earning on their savings accounts, in comparison with those who have switched accounts recently.
Shopping Around For Savings
Some banks offer interest rates of just 0.05% on instant access accounts, with some current accounts offering as much as 5% with a capped deposit. On average, those who switch banks gain 0.82% on their interest rates, equating to over £48 extra per year according to research conducted by the FCA and Citizens Advice. This means that shopping around for savings accounts really does benefit customers. The FCA has suggested however that a Basic Savings Rate (BSR) applied to savings accounts and easy access cash ISAs could provide consumers with an extra £150 million to £480 million per year.
Basic Savings Rate
Christopher Woolard of the FCA said:
“Efforts to encourage customers to switch have had limited impact and we remain concerned about the way firms are treating customers. 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.”
You can find out more about the proposed Basic Savings Rate on the Which? Website. If you would like help or advice on opening a new savings account, please get in touch. Our experienced advisers will be able to help select the perfect savings account for you.
