One of England’s major consumer watchdog organizations, Financial Conduct Authority (FCA) will begin a new study of the cash savings markets in the United Kingdom. In April, Britain’s major banks began bombarding the public with advertisements that encourage people to put their money into new accounts with favorable tax treatments. A string of mis-selling scandals that soon followed is prompting the FCA to take a close look at the “teaser” or introductory interest rates the banks are offering new customers.
The FCA’s main focus is stopping consumers from being ripped off after the rates expire. Some savers do not move the money out of the account, or are prevented from doing so, when the rates are reduced. “In looking at cash savings, we will examine an area that affects most people and see if there is action we need to take. This is exactly the sort of area I want the FCA to be operating in,” said Martin Wheatley, FCA Chief Executive .
On Tuesday, Wheatley will answer questions from members of Britain’s parliament on the trillion-pound market. He says, “We know that switching rates are low for financial services products and savings accounts are no exception. Even when people do switch their accounts, they are twice as likely to go with their existing provider then move to the offering of a competitor.”
When the review is completed at the end of this year, the Financial Conduct Authority will consider studying annuities. Annuities are used by people as a means of producing income once they retire. The watchdog is also planning to review how competition works between financial services firms early next year to ensure customers get a fair deal.
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