Under the FCA’s Consumer Duty banks, asset managers and other regulated financial services firms have to make sure customers receive fair value and that no group is receiving a worse deal than others on the same product
The biggest banks in Britain are paying below-average interest rates for some savings accounts and face regulatory action if they fail to offer better value, the FCA warned on Wednesday.
The FCA, which last year launched a review of the cash savings market, said it had worked with Lloyds, HSBC, NatWest, Santander UK, Barclays, Nationwide Building Society, TSB, Virgin Money UK and the Cooperative Bank.
Under the FCA’s Consumer Duty, which came into force last July and is one of the regulator’s top priorities, banks, asset managers and other regulated financial services firms have to make sure customers receive fair value and that no group is receiving a worse deal than others on the same product.
Savers will receive a total of nearly £4 billion per year in extra interest payments after average rates on easy access savings accounts increased to 2.11% in June from 1.66% last July. Around 175 instant access accounts offered rates above 4%, the Financial Conduct Authority said.
But the biggest firms can still pay below the market average for standard easy access products and the watchdog queried how some firms assessed the value of their products.
We expect firms will improve fair value assessments over time and we will take appropriate action where we consider this is not the case, the Financial Conduct Authority said.
Regulatory action can range from working with firms to improve customer value to penalties.
The BoE reduced bank rates to 5% from a 16-year high of 5.25% in August and economists expect further easing this year, amid hopes that Britain’s battle with weak growth and high inflation might be coming to an end.