Savings accounts offering interest rates as low as 0.01%, reveals FCA
09 Dec 2015
As part of its ongoing review of the UK savings market, the Financial Conduct Authority (FCA) has published a ‘name-and-shame’ list of banks and building societies offering very low interest rates, with some giving savers returns of just 0.01%.
The financial regulator found that six organisations, including HSBC and First Direct, offered rates on cash savings accounts of 0.05% or less, while the Danske Bank, Progressive Building Society and Ulster Bank (RBS) had accounts offering 0.01%, meaning that an investor with £1000 would earn just 1p interest a year.
Cash accounts offered in-branch generally provided the poorest returns, with in-branch cash Individual Savings Accounts (ISAs) offering the next lowest rates.
The FCA did note that the providers that were ‘named-and-shamed’ do offer higher returns on other accounts, and suggested that savers should switch accounts to find better deals.
The move to reveal low return accounts is being dubbed ‘sunlight data’, and a similar list will be published every six months. It is part of the FCA’s wider brief to encourage more effective competition in the savings marketplace.
The body has also announced new measures to force banks and building societies to provide clearer information on interest rates. From December 2016, providers must tell consumers when interest rates change, and when introductory offers expire. Measures include:
- key information must be displayed in a summary box, and shown to the consumer at the point of sale
- interest rates to be displayed ‘prominently’ alongside the account balance
- banks and building societies must provide a ‘prompt and efficient’ switching service to other accounts.
Christopher Woolard, director of Strategy and Competition at the FCA, said: ‘With many savers never switching because they don't think it will make a difference, our rules will help consumers get the information they need to shop around.
‘In a good market, providers should be competing to offer the best possible deal and should a consumer wish to move accounts, they should be able to do so with the minimum of fuss.’