UK savers to receive text when introductory rates end
24/07/2015
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 moneycomms.co.uk 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.
Need financial advice?
If you have any personal finance questions related to this news article, then please contact our financial advisers. You can get in touch by asking a question online, calling us on 0800 092 1245, or by arranging a visit.
Share this..
Related stories
Why is inflation bad news for your savings?
Over the last few months we have heard concerns about inflation pushing ahead in the short to medium term and the potential impact this could have on the UK savings market. So why is inflation such bad news for your savings? The truth is that we are in a relatively unique situation in the UK, and indeed around the world, where base rates are only just above zero which has led to very low saving...
Read MoreTeenage financial know-how 'on the rise'
Knowledge of financial products among teenagers has been drastically improved by government education initiatives, Britain's largest quango has said.According to the Learning and Skills Council (LSC) the advent of education maintenance allowance (EMA) has encouraged young people to open bank accounts and consider their savings.Research released today shows that three per cent of 16-year-olds in En...
Read MoreRDR ‘could deal Blow to Savings’
Tory MP, Howard Flight, has spoken out against the Retail Distribution Review which is planned to come into effect at the start of 2013. It is his view that it could have a damaging effect on savers within the UK, reducing the availability of financial advice. He also added that this would have a detrimental effect on the economy, by obstructing savings needed to pull the nation out of recessio...
Read MoreRegional ISA trends highlighted by Halifax report
ISA savers in Epsom and Ewell have the biggest account balances in the country, new figures from Halifax have shown.According to the research, people in the two towns have around £9,340 in their accounts - well up on the national average of just under £7,000.When the Halifax figures were adjusted for average earnings in each area, Christchurch in Dorset was found to have the biggest savers.Peopl...
Read MorePeople prefer to save rather than borrow, survey shows
Britain's credit culture could be on the wane, the Yorkshire Bank said today.According to the lender, people are becoming more attracted to savings accounts.Figures from Yorkshire Bank show that 75 per cent of people believe that saving up for a high-cost purchase is "more satisfying" than getting it on credit.For "spur of the moment" expenditure, this figure hits 85 per cent.Commenting on the sur...
Read More