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FCA launches competition study into £1 trillion cash savings market
by Jun Merrett on Sep 09, 2013 at 10:23
The Financial Conduct Authority (FCA) will launch a market study into the UK's £1 trillion cash savings market.
The regulator said the study will be a part of a programme of work where it will look across the financial services and assess whether competition is working effectively in the best interest of consumers.
The study will look at issues including the effects of 'teaser rates' which are introductory interest rates that are offered to new clients, and how often consumers switch their savings accounts. The FCA said as 80% of UK adults have a cash savings account it is keen to ensure firms offer consumers the best returns possible and information that meets their needs.
Martin Wheatley (pictured), chief executive of the FCA, said: 'We will be undertaking a programme of work and research that will enable us to have a better understanding of how the markets are working and the dynamics that drive both them and the decisions that consumers make.
'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.
'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 than move to the offering of a competitor.'
The regulator said it would also consider whether it should conduct a market study on annuities after it has concluded its thematic review towards the end of the year.
The FCA said it will also conduct a wholesale strategic review early next year to look at the way competition works between firms to ensure that consumers get a better deal.
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