The United Kingdom’s Financial Conduct Authority (FCA) has presented a 14-point battery aimed at ensuring that banks and other credit institutions appropriately pass through to savers’ deposits increases in interest rates, as well as to improve communication with customers, and warning that it will “take action” against those institutions that do not justify why they offer lower interest rates.
The plan announced this Monday by the FCA comes after a review of the cash savings market and a round table held with the banks at the beginning of July, which allowed the British to verify that, although the interest rates of the accounts of savings have been increasing, they have done so more slowly in the case of easily accessible accounts.
IN THIS REGARD, It Points Out That Nine of the Largest Savings Entities, On Average, Only Transferred 28% OF THE INCREASE in the Base Rate to SUD FA 2022 and May 2023, while for deposits with advance notice and fixed term, a greater pass-through of rate increases, with 51% in the same period for these nine entities.
The characteristics that offer the lowest interest rates to savings should justify before the end of August that they are fair rates
In this way, from now on the entities that offer the lowest interest rates to savings must justify before the end of August how these rates offer a fair value and, if they cannot do so, “the FCA will take action”. Likewise, entities must also intensify their communications with customers about their options and measure the effectiveness of their communication campaigns.
“We want a competitive cash savings market that offers better deals for savers, where interest rates are revised quickly after base rate changes, and entities encourage savers to switch to higher-interest-paying accounts.” said Sheldon Mills, FCA’s executive director of Consumer and Competition.
