LONDON (Reuters) - UK watchdog Financial Conduct Authority (FCA) has begun studying competition in the trillion-pound cash savings market to see if customers are getting a fair deal.
At the start of the new financial year in April, people are bombarded with advertisements from Britain’s major banks, encouraging them to put cash into accounts with favourable tax treatments.
The FCA, launched in April with a strong focus on stopping consumers being ripped off after a string of miss-selling scandals, said it was looking at the effects of so-called “teaser” or introductory interest rates to new customers.
Some savers leave their money in the account even after the teaser rate has expired and the FCA will look at how often customers switch accounts.
“In looking at cash savings, we will examine an area that affects most people and see if there is action we need to take. This is exactly the sort of area I want the FCA to be operating in,” FCA Chief Executive Martin Wheatley said in a statement.
The announcement comes as Wheatley prepares to answer questions on Tuesday from members of Britain’s parliament, who are likely to ask what is being done to protect consumers.
“We know that switching rates are low for financial services products and savings accounts are no exception. Even when people do switch their accounts, they are twice as likely to go with their existing provider than move to the offering of a competitor,” Wheatley said.
The watchdog will consider studying annuities, products that offered retired people an income, once a review of the sector is finished by the end of the year. The FCA will also review early next year the way competition works between financial services firms to ensure customers get a better deal.
Reporting by Huw Jones; editing by Tom Pfeiffer