In our era of record-low interest rates, choosing a savings account can feel like picking the best of a bad bunch.You wouldn't think that a name would make that much difference (you might assume that the interest rate on offer was far more important), and yet a recent episode of Channel 4's documentary Dispatches highlighted that consumers are easily drawn to savings account names featuring the words "Gold", "Platinum" and "Select" even if these accounts only offer attractive interest rates for a short period.
Halifax's Liquid Gold account is one good example advertised in the late 1980s by the late George Cole as a "nice little earner" (back then the account was offered by the Leeds Building Society, which Halifax took over in 1995), the once 10% interest rate has dwindled to a mere 0.1% for existing customers.
As a result, and as part of its ongoing effort to increase competition in the £700bn cash savings market, the Financial Conduct Authority (FCA) wants to ban banks and building societies from using "complex jargon" or misleading account names (eg, Gold Saver) for an account that offers a poor return even if it started out offering a decent one.
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The regulator also wants to make it even easier to switch and compare accounts. According to the FCA, in the past three years 80% of easy-access accounts have remained "unswitched" due to the perceived hassle involved, despite previous changes to the switching regime that have made the process far easier.
The new measures, which should come into force in 2016, will mean that account providers have to warn existing customers of any upcoming changes to interestrates, including warning of changes to bonus interest rates, no more than14 days before they end. As Anna Bowes of savingschampion.co.uk puts it, this is "long overdue At the moment many banks tell someone their bonus rate will end months before it is due to do so. This means they either switch then and lose the extra interest, or risk waiting and forgetting to do so".
The FCA also plans to name and shame the firms that pay poor rates to long-standing customers.The new rules will also require providers to transfer cash Individual Savings Accounts (Isas) in seven days rather than the current 15, by January 2017.
Of course, none of this helps with the core problem, which is that interest rates are incredibly low there's nothing the FCA can do about that.But equally, if you're not happy with your account provider, there's no need to wait for the FCA to act if it's been a while since you last checked, go to a comparison site and see if you can do any better.
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