FCA calls for comments on cash savings study

colsten

The FCA have conducted a study into the savings market and are now seeking comments on their proposed remedies. All comments should be sent by noon on Wednesday 18 February 2015 to cashsavings@fca.org.uk.

Summary:

We are proposing remedies in four main areas:

1. Giving consumers sufficiently clear and targeted information at the right time so that they can easily and quickly compare their savings accounts with alternative ones and know how to switch if they want to do so.
   
   
2. Making the switching process as easy as possible so that it does not put consumers off moving their money to another savings provider or to another savings account with the same provider.
   
   
3. Removing some of the advantages of the large providers by making it easier for firms to provide a way for consumers to view and manage accounts with different providers in one place.
   
   
4. Being more transparent about the way in which providers are reducing interest rates on variable rate savings accounts the longer a consumer holds the account.

Full story: http://www.fca.org.uk/news/cash-savings-market-study

Joe_Bloggs

The remit of the FCA is so narrow in that it misses that the best places for savings is in a collection high interest paying current accounts rather than a traditionally termed savings account. I don't know why these current accounts exist. Perhaps it is a further QE experiment for the consumer similar to payment protection insurance rebates.

Consumer inertia is an ever present phenomena. Pointing out that the general public are lethargic and ignorant when it comes to savings rates is not going to be popular.

Martin Lewis has set an example of how to explain to the public the error of their ways without the offense that would be taken if a bunch of FCA banker lapdogs said the same thing.

J_B.

colsten

Joe_Bloggs wrote: »

The remit of the FCA is so narrow in that it misses that the best places for savings is in a collection high interest paying current accounts rather than a traditionally termed savings account.

The savings market has existed before the current phenomenon of high interest paying current accounts appeared, and will continue to exist long after it vanished again. The very last thing savers should wish is for is for the FCA or some consumer rights groups to wade into the high interest paying current accounts market as this would almost certainly destroy it faster than it will naturally disappear anyway.

Joe_Bloggs wrote: »

I don't know why these current accounts exist.

does it matter whether we know the reason? Though it's easy enough to figure out what the banks are trying to achieve.

Joe_Bloggs wrote: »

Consumer inertia is an ever present phenomena. Pointing out that the general public are lethargic and ignorant when it comes to savings rates is not going to be popular.

the truth is often uncomfortable. What would be the point in not telling people that they can get better interest rates elsewhere?

Joe_Bloggs wrote: »

Martin Lewis has set an example of how to explain to the public the error of their ways without the offense that would be taken if a bunch of FCA banker lapdogs said the same thing.

Whilst MSE has helped educate people, it doesn't mean there isn't a vast number of people who have money in savings accounts that pay literally no interest, or in current accounts that pay zero interest. According to the FCA, £160bn (billion!) in cash savings is languishing in low-interest accounts.

I can't see anything wrong in principle with what you affectionately call "a bunch of FCA banker lapdogs" making interest rates more transparent, and switching savings accounts easier. Collectively, they know where precisely the £160bn sits, MSE doesn't (and couldn't ever know, for DPA reasons), and probably wouldn't even want to know.

I do, however, have very serious concerns that the FCA will lumber savings providers with costly rules that will further reduce the interest rates providers will be prepared to pay. More transparent pricing and easier switching hasn't done much to remove people's lethargy in the energy or current account markets, so why would it make much of a difference in the savings market?

jimjames

colsten wrote: »

More transparent pricing and easier switching hasn't done much to remove people's lethargy in the energy or current account markets, so why would it make much of a difference in the savings market?

The news last night had a story about British Gas reducing their prices and they interviewed a lady who was complaining that the price drop wasn't immediate and needed every penny to heat her house.

No mention that she'd save £200 or so by switching to a cheaper supplier than sticking with BG and waiting for a small price drop.

colsten

jimjames wrote: »

The news last night had a story about British Gas reducing their prices and they interviewed a lady who was complaining that the price drop wasn't immediate and needed every penny to heat her house.

No mention that she'd save £200 or so by switching to a cheaper supplier than sticking with BG and waiting for a small price drop.

It's the 'glass half empty' and complaints/blame culture that's sweeping the country.

gadgetmind

colsten wrote: »

The FCA have conducted a study into the savings market and are now seeking comments on their proposed remedies.

Will they accept "Keep your meddling hands off as currently the lazy people are subsidising those who're prepared to keep on top of their finances!" as a response?