FCA proposing single easy access savings interest rate after a year

SnowMan

https://www.fca.org.uk/news/press-releases/fca-acts-help-customers-get-better-rates-cash-savings

The Financial Conduct Authority (FCA) is today proposing to reform the easy access cash savings market. Under new rules all firms will have to set a single easy access rate (SEAR) across all easy access accounts. Firms will have flexibility to offer multiple introductory rates for up to 12 months, then they will need to choose one SEAR for their easy access cash savings accounts, and one for their easy access cash savings ISAs

Eco_Miser

This will block any 13 month or longer introductory offers. Will it also mess up Virgin's 13 month Monthly Savers - which are also easy access savings.

Thrugelmir

About time this was enforced.

masonic

So this will formalise the need to shift your easy access savings at least once a year.

Mr.Saver

I don't like this. For many reasons...

1. People who forget about their savings in a year are going to benefit from this rule, buy who pays the price? Certainly not the banks.

2. Longer than 12 months introductory rate is banned, and presumably renewable bonus (e.g.: Marcus) too. What's wrong with those offers?

3. It's likely that we all will need to move our savings at least once per year.

4. This blanket ban will also affect some account holder's perks. E.g.: packaged current account holders / mortgage holders / etc.

5. What stops the banks from offering a rubbish underlying rate and competitive introductory rates at all time? The people to whom this rule is seek to protect will get the rubbish rate anyway. So what's the point of this new rule?

isasmurf

Rejoice! The FCA has dropped this nonsense proposal.
https://www.fca.org.uk/news/statements/statement-certain-fca-work-light-coronavirus-and-changing-market-conditions

In January 2020, we published a consultation paper (CP20/1) setting out proposals to simplify and improve competition in the cash savings market by introducing a Single Easy Access Rate (SEAR).

Our consultation was due to close in April 2020. Due to the impact of coronavirus we extended the consultation period to 15 December 2020, in order to prioritise urgent work with banks and building societies to help consumers during the pandemic.

Given the continuing impact of coronavirus and the low-interest rate environment, we have decided to stop this work. As interest rates for new products fall, so does the gap between rates paid to new and longstanding customers, and the size of the harm falls. We therefore do not consider that introducing the SEAR would be proportionate to the current level of harm in this market. However, we will continue to monitor the market and we may revisit our priorities if we see significant harm to consumers in the future.

[Deleted User]

They dropped it because it would mean all banks need to equalize their SEAR savings rate to round zero😉.