The FCA has published a new update on its cash savings market study.
In the update, the FCA sets out the results of a series of randomised controlled trials to assess the efficacy of a number of additional potential remedies intended to improve competition in the cash savings market. The trials that the FCA carried out tested a number of additional remedies which include:
- digital reminders – to test the effectiveness of reminders about interest rate changes sent by email and SMS in comparison to letter-based reminders previously tested;
- a switching box – provided periodically to customers that would give information on the potential financial gains from shopping around and switching, prompting customers to consider their choice of account and provider; and
- a return switching form – a very simple ‘tear-off’ form and pre-paid envelope enabling a customer to switch to a better paying account offered by their existing firm more easily.
The finding of the trials showed that digital reminders via SMS and email were positive and indicated that they were just as effective as letter reminders. The research also found that the switching box and the return switching form had some positive effects, but they only stimulated switching within the same bank and did not increase switching to better accounts offered by other providers.
Overall, the FCA’s research showed that some of its proposed remedies, such as the switching box, that it initially intended to implement did not have the expected impact and therefore the regulator will not proceed with these remedies without further analysis. Following the trial findings the FCA will investigate alternative options to encourage more shopping around. The FCA will report on these findings in Q4 2016.
View FCA cash saving market study update, 18 July 2016