FCA proposes text alerts to inform savers of interest rate changes

It's part of a package of propose measures to be unveiled by the Financial Conduct Authority


FCA proposes text alerts to inform savers of interest rate changes

Savers will receive text message alerts to remind them when an introductory bonus rate is set to end under plans to make it easier for them to seek out better returns on their cash.

A package of proposed measures has been unveiled by the Financial Conduct Authority (FCA) to ramp up competition in the £700 billion cash savings market and help consumers shop around for the best possible deal with the "minimum of fuss".

The FCA plans to force firms to provide clearer information on the interest rates on their cash savings products as well as clearly alerting them to a change in the rate of interest they are receiving, for example when an introductory bonus rate comes to an end.

The measures are being planned after a market study found that for many consumers, competition was not working as effectively as it could be.

The plans include firms making interest rate information more easily accessible and being more active about alerting consumers to changes in their interest rates, for example telling them about the expiry of a bonus rate or maturity of a fixed-term account by text message.

The FCA said that firms should strip out "complex jargon" and give customers easy-to-understand key information to help them compare savings accounts, with proposed summary boxes.

It also plans to publish information highlighting the firms which pay poor rates of interest to long-standing customers.

Rachel Springall, a finance expert at Moneyfacts.co.uk, said: "Moving a savings pot from one bonus rate account to the next is a clever way to take advantage of higher returns, but for consumers who are less proactive, it may mean that they end up sitting on a paltry rate for a long time.

"These new measures from the FCA will help consumers to plan better, as well as support those who may forget when a long-term investment matures."

The FCA wants feedback on the proposals and is expected to confirm finalised rules later this year, with a view to the rules to coming into force in 2016.

The regulator is also working with the industry to ensure that from January 2017 the vast majority of cash Isa transfers can take place in seven days.

According to Moneyfacts, the average Isa rate on the market has fallen to 1.45%, down from 1.57% a year ago.

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 and easy to understand. When they wish to move accounts, they should be able to do so with the minimum of fuss.

"Our package of measures are all about giving consumers the information they need to make an informed decision about what to do with their savings, and the ability to act on it quickly."

Richard Lloyd, executive director of consumer group Which?, described the plans as "a significant win for savers".

He said: "With many savers never switching because they don't think it will make a difference, it's good that the FCA has listened to our calls to make savings providers do more to help customers get a better deal."

Andrew Hagger, founder of website Moneycomms.co.uk, said the proposed changes are "long overdue".

He said: "Too often banks and building societies offer best buy deals for new customers whilst hoards of loyal savers on the back book are left with long-forgotten deals paying next to nothing."

10 things your bank doesn't want you to know

10 things your bank doesn't want you to know

More on AOL Money:

Interest rates could rise at turn of year - Mark Carney​

The accounts paying most interest on your cash​

Interest only mortgage: your repayment options​

Mark Carney on Interest Rates