FCA considers using texts to warn of low savings rates
Consumers who get poor rates of interest on their savings accounts could soon receive texts or emails to warn them of better deals available.
The city regulator, the Financial Conduct Authority (FCA), has moved a step closer to the idea as part of its plan to expose poor savings rates.
For the second year running, it said some savers are getting an annual return of as little as 0.01%.
Some savers with £1,000 to invest are therefore earning just 10p a year.
From December this year, banks and building societies will have to provide a "summary box" on statements, giving basic information about savings rates which will make their accounts easier to compare with others.
But the FCA wants to put further pressure on providers who give poor returns.
Having carried out a series of trials, it has rejected the idea of a "switching box" - which would prompt savers to switch to a different account with the same bank.
It has also decided against a tear-off form, which would have allowed customers to switch account by post.
However, trials of SMS text alerts and email reminders were found to have a positive effect on persuading people to switch accounts.
It will therefore consider the idea in more detail in the months ahead.
Among the worst savings-rates offenders named by the FCA were:
- Danske Bank and Ulster Bank, which pay 0.01% a year on cash savings
- Marks & Spencer Bank, which pays 0.05% on a cash ISA
- Bank of Scotland, which pays 0.1% on a cash ISA
The FCA's full list reflects savings rates between April and June 2016.
"Providers seem perfectly happy to let savings held in closed accounts wither on the vine," said Danny Cox of investment service Hargreaves Lansdown.
"This shows the importance of shopping around and switching accounts to make the most of your money."
The Bank of England is expected to lower base rates further next month, putting further pressure on savings rates.