On 31 July 2023, the FCA published a report on the cash savings market review 2023. The report analyses the state of competition in the cash savings market, sets out the results the regulator expects to see and the actions needed to achieve these.
The FCA has identified 8 actions it will take and 6 actions for firms. Together these will improve competition in the market and help make sure that consumers get better savings outcomes.
The FCA will:
- Require firms offering the lowest rates to provide their fair value assessments under the Consumer Duty by 31 August 2023 and take robust action by the end of 2023 against those who cannot demonstrate fair value.
- Review the timing of firms’ savings rate changes each time there is a base rate change.
- Publish an analysis every 6 months of firms’ easy access savings rates, listing distribution from best to worst.
- Analyse the difference between on-sale and off-sale products, challenging firms to explain how large differences offer fair value and considering further action if this gap does not continue to close.
- Review firms’ performance on cash ISA to cash ISA switching.
- Conduct further analysis into the contribution of cash savings to firms’ profitability.
- Review the effectiveness of firms’ engagement with customers by the end of March 2024 and act if firms have not effectively delivered the outcomes the FCA has set out.
- Work with others, including the Money and Pensions Service, to identify what more can be done to support consumers to save regularly, strengthening their financial resilience.
The FCA expects firms to:
- From 31 July 2023, use their fair value assessments of on-sale savings products to assure themselves and the FCA, where needed, that these represent fair value for customers.
- Accelerate their fair value assessments for off-sale accounts ahead of the July 2024 Consumer Duty deadline for off-sale accounts.
- Take action to prompt their customers in lower paying savings accounts or non-interest bearing accounts to consider alternatives, including by:
- proactively contacting their customers to inform them of alternative savings products
- contacting customers in non-interest bearing accounts, such as PCAs, who may benefit from building their financial resilience by regularly saving into a savings account
- larger firms to inform us by 30 September 2023 how they have identified and communicated with these customers
- building regular prompts, in particular after base rate changes, into their customer platforms that encourage customers to consider alternative savings products
- Closely monitor the effectiveness of customer communications, with larger firms providing the FCA with an evaluation by end 2023 and any follow up action they are taking.
- Support consumer financial resilience by encouraging customers to start saving and/or search for higher rates, with the largest firms committing to support a targeted firm-by-firm communications campaign.
- Consider how they can support their customers to access the free advice available from MoneyHelper.
The FCA will conduct a further review of the cash savings market in the second half of 2023 and will propose further action if insufficient progress is made.