Banks could be forced to set a minimum interest rate on their savings accounts, the financial conduct authority (FCA) has suggested.
The FCA advised that they are concerned that savers who are loyal to their bank or building society and stay with them for a long period of time are likely to get poor returns of their savings.
Some banks are paying 0.05% a year on its instant access accounts.
The Basic Savings Rate (BSR) would apply to all easy access cash ISA’s and savings accounts.
The BSR would be applied over a certain period of time, for example after the first year’s introductory interest rate has ended.
Citizens Advice have advised that the average amount savers lose a year by not switching accounts is £48.00
In the proposed plan the FCA would let each individual Bank or building society decide their own BSR and this would then need to apply across all their instant access accounts. The rates would then be published to the FCA’s website, this would allow consumers to compare across brands.
This is not the first step the FCA has taken to improve competition in the savings market, previously they have instructed Banks and building societies to have clearer communication with their customers about the rates they receive, have a faster cash ISA transfer process and enhanced customer prompts before a rate is reduced.
The FCA have advised that a BSR could enable customers to jointly earn up to £480m a year more than they do at the moment.
For the full article please go to: https://www.bbc.co.uk/news/business-44950610