Customers could get higher returns on their savings accounts in a new FCA overhaul.
Millions of savers across the UK could benefit from new proposals by the Financial Conduct Authority (FCA) to reform the easy access savings market.
Under the new rules, lenders will have to set a “single easy access rate” or SEAR across all their easy-access savings accounts and easy-access cash Isas.
Savings account providers will have the flexibility to offer introductory rates for up to 12 months.
The FCA has previously raised concerns that competition in the easy-access savings market is not working.
Around 40 million people hold easy-access savings accounts in the UK and many longstanding customers receive low rates of interest.
The changes aim to improve competition in the market by encouraging firms to increase the interest rates they offer while protecting customers that receive low rates.
Savers could be £260m better off from higher interest rates, the FCA estimates.
Under the proposals, lenders will also have to publish data every six months on the SEARs that they offer, making it easier to compare rates.
Christopher Woolard, executive director of strategy and competition at the FCA says: “Competition is not working well for many of the 40 million consumers with easy access savings accounts and we want that to change.
“Our proposals would mean firms have a single rate for customers immediately after their accounts have been open for 12 months.
"Firms will choose the rates they offer, and the rates they offer will have to be clearly published.
“This will prevent firms from gradually reducing interest rates over time and make them compete for all their customers.”
Finding the best savings account
Interest rates are at an all-time low making it a tough market for savers.
Finding the best savings account for you will depend on your financial circumstances.
Currently the best savings rates are paid on regular savings accounts and fixed-rate savings accounts.
Both require you pay in a certain amount of money each month for a fixed period.
They often have withdrawal restrictions meaning that you might not be able to access your money in an emergency.
If you’re looking to build up a rainy-day fund that you can access when necessary then an easy-access savings account may be more suitable.
The best easy-access savings account rate is 1.4% and currently offered by Chelsea Building Society, Gatehouse Bank and Yorkshire Building Society.
Check out our guide for a round up of this week’s best savings account rates for more information.
NB: The interest rates quoted were correct at the time of writing (9/01/2020) Savings rates fluctuate and are subject to change.