Banks and building societies must offer clearer savings deals and tell people when gimmicky teaser rates finish

City Watchdog also demands seven day switching for Cash Isas by 2017

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The Independent Online

From next year banks and building societies will have to make it clear how much interest savers are paid on accounts and tell them if rates drop, such as when teaser rates end, under new rules being introduced by the City watchdog.

The Financial Conduct Authority is also planning to force providers to introduce seven day switching of cash Isas by 2017.

It was forced to act after its market study into the £700bn cash savings market revealed competition is not working as effectively as it should.

Christopher Woolard, director of strategy and competition at the FCA, said: “In a good market, providers should be competing to offer the best possible deal. Consumers should expect the information they need to shop around to be clear an easy to understand.

“When they wish to move accounts, they should be able to do so with the minimum of fuss.”

Under the new measures firms will have to give consumers easy-to-understand key information to help them compare savings accounts. They will also have to contact customers, by text for instance, when a bonus rate ends or fixed term account expires.

At present savers are left to languish in accounts paying paltry rates when their market-leading promotional rate ends. The marketing gimmick has meant many consumers ending up with much more pathetic returns than they expected.

Complex jargon which hoodwinks people into the wrong accounts is also to be outlawed and banks and building societies will have to improve their savings switching services for those using online or mobile banking.

Andrew Hagger of Moneycomms said: “These enhancements are long overdue - providers should have been doing these basics as a matter of course and it shouldn't have needed the regulator to step in to make it happen.”

He said that providers have, for far too long, increased profitability to the detriment of customers.

The FCA is expected to confirm finalised rules later this year.

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