Which? response to the FCA’s investigation into the cash savings market

In response to the Financial Conduct Authority’s investigation into the cash savings market, Which? executive director, Richard Lloyd, said:

“Consumers are losing out on billions of pounds from savings languishing in accounts paying poor levels of interest, so we’re pleased the Financial Conduct Authority (FCA) has launched this investigation. We also want the FCA to look specifically at zombie accounts that lure people in with high introductory rates which then drop down to often very poor rates of interest.”

Background

1. When Which? launched its Great British Savings Campaign back in 2010, we found that savers were missing out on a shocking £12 billion in interest because their accounts were paying them miserly rates as low as 0.1%. When we updated our investigation last year, we found that this had increased to £12.8 billion.

2. The August 2013 Which? Consumer Insight Tracker found that three in five (63%) are worried about the interest rate on their savings.

3. In February 2013, Which? found that the average interest rate on a savings account had fallen by 40% in the six months previously.

4. Use the Which? savings booster to find the best account for your savings.

5. Zombie accounts are accounts that once paid an attractive rate of interest but have since dropped to 0.5% or below, in which savers still have billions of pounds languishing. Of the 1,800 instant-access and notice cash Isas and savings accounts we looked in 2012, just shy of 1,300 were zombie accounts closed to new business. These accounts – also known as superseded accounts – often pay pitiful interest rates. Some 564 paid 0.5% or less, while 313 paid 0.1% or less.

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