FCA seeks feedback on price discrimination in the cash savings market

The FCA has published a discussion paper on price discrimination in the cash savings market.

The FCA is concerned that longstanding customers receive lower interest rates on easy access cash savings accounts products than those received by customers who shop around; and that competition is not working well in the cash savings market, particularly for customers that stay with the same provider over a long period of time.

The discussion paper aims to gather input on the harm to customers in the cash savings market and what action the FCA should take to address the harm.

It also provides further detail on several options that the FCA is considering to address the harm, including the introduction of a switching box giving information on the potential financial gains from shopping around and switching; a complete ban on price discrimination; and a superseded accounts rule.

Most notably, the FCA is considering the introduction of a basic savings rate that would apply to all easy access savings accounts and cash ISAs after they have been open for a set period of time.

The deadline for comments is 25 October 2018. The FCA will then publish a feedback statement and if it decides to take a proposal forward, a consultation paper in early 2019 setting out the feedback received and next steps.