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UK savers to receive text when introductory rates end


Savers will receive a text message from their bank or building society when their introductory interest rate expires, under new plans by the Financial Conduct Authority (FCA).

Many savers are enticed by introductory ‘teaser’ rates by banks and building societies, however, after a limited time these rates often switch the customer onto a poorer deal.

The FCA has said that savings providers will need to start alerting customers when their interest rate changes or if a fixed-term account matures.

Christopher Woolard, a director at the FCA said that “consumers should expect the information they need to shop around to be clear and easy to understand”.

He also said that “providers should be competing to offer the best deal”.

These proposals to bring in new regulations around communicating with customers are a result of an investigation into the UK savings market by the FCA. The findings of this investigation suggested that savers were getting poor interest rates and that there needed to be more competition between banks.

Actively alert

The FCA has said that banks will have to actively alert their customers when introductory interest rates change, with one proposal being that banks should utilise text messages to do this.

They also said that once receiving the information, the savings provider should then allow the customer to switch accounts with “the minimum of fuss”.

It has been suggested that this information could also be communicated in the form of a “switching box”, which would allow the customer to rank their current deal alongside industry averages.

Several campaigners have welcomed the FCA’s proposals as a step in the right direction.

Andrew Hagger, of said:

“For too long providers have increased profitability to the detriment of customers as their cash sits in accounts offering miserly returns.”

"Too often banks and building societies offer best buy deals for new customers whilst hoards of loyal savers on the back book are left with long forgotten deals paying next to nothing."

The proposals will now go into a consultation with industry leaders, with the plans expected to be implemented by July 2016.

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