Some good news, at last, on teaser rates. From next year, banks and building societies will have to make it clear how much interest savers are paid on accounts and tell them when teaser rates end, under new rules being introduced by the City watchdog.
The Financial Conduct Authority is also planning to make providers 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.
Under the new measures, firms will have to give consumers easy-to-understand information to help them compare savings accounts. They will also have to contact customers, by text for instance, when a bonus rate ends or a 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.
I welcome the move, but want more. Teaser rates are fine for those who are happy to monitor their account regularly and know when they need to switch their savings to avoid ending up being ripped off. But millions like me, I believe, simply want a safe home for our savings that pays a fair rate.
For many of us, our rainy day savings are just that – cash that we may need to call on in an emergency. In the meantime, it's reassuring to know that the nest egg is there and growing, albeit slowly. And it's incredibly annoying to check your savings to discover the rate you've been getting for years is 0.1 per cent or less, as happens when banks and building societies withdraw accounts. They simply switch you into zombie savings paying nothing, because they can.
So making them text us when the decent rates disappear should be only the start of the overhaul of the savings market. The regulator's work should only finish when we're all getting a fair return on our money.Reuse content