Banks are failing to come clean with savers

Broken piggy bank

Banks and building societies stand accused of baffling savers, by failing to provide simple information on the interest they earn on their account and by making it difficult to switch accounts.

In its latest investigation into the £700 billion savings market, City regulator the Financial Conduct Authority (FCA) says providers should highlight the lowest rate they pay savers.

Some customers earn just 0.1% before tax if they have been in an old easy-access account for several years, while new savers earn 10 times as much at 1%.

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Shocking findings

Providers should also make sure savers know how to switch, and they should improve the way they let customers know their rate is about to fall.

Often the rate is hidden away in long lists of numbers, making it difficult for people to work out what they are earning.

Shockingly, the FCA found a huge £160 billion of money in easy-acccess accounts - 23% of the total - earned 0.5% or less.

Its study revealed savers are also put off switching because of the inconvenience. Four out of five easy-access accounts have not been switched in the last three years.

The switching process should be made as easy as possible, whether to a different provider or to another account offered by the current one. The FCA also proposes that the maximum time for switching a cash Isa should be cut from its current 15 days.

Christopher Woolard, director of strategy and competition at the FCA, says: 'We want to see firms making simple information much easier to find. More also needs to be done to reduce the hassle for consumers to switch their savings.'

The FCA is consulting the industry as to how to put its proposals for improvement into action.

This article was written for our sister website Money Observer

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I'm beenwith Lloyds for my current account for nearly 50 yrs (initially TSB) and only found out last year that I could've asked for an annual "bonus" % on top of the basis interest rate! Never, ever been made aware of that by my bank. Is this standard practice? Are banks obliged to inform us of this???

Lloyds have just written to tell me that they are "simplifying" their savings range to make it "simper to choose an account that is right for [me]"
They are achieving this by transferring my Easy Saver to a Standard Saver and cutting the rate from a whole 0.75% to 0.25%.
How helpful of them !

When my regular savings account (4% gross on £250 saved per month) matured after 12 months, the kind people at HSBC opened a new savings account for me and put the lump in it.

What a wonderful interest rate:
0.05% AER/gross for Bank Account, Bank Account Pay Monthly or Graduate Bank Account customers.

So the £3000 earned £65 interest after 12 months, but had I left it in the account that their "kind" gesture shoved it in, it would earn a whopping £1.50p.

Time to switch banks!