UK Financial Conduct Authority Publishes Update on Cash Savings Market

The Financial Conduct Authority has published an update on progress in the cash savings market. This update provides further detail on how the cash savings market has developed since the FCA's update in December 2023. Specifically, the update considers the progress that has been made in respect of the points identified by the FCA in its July 2023 Review. In this update, the FCA identifies eight FCA-specific actions that should be helpful for all firms which offer cash savings products and highlights areas where it expects to see further improvements.

Since publication of the review, the FCA has seen improvements in both the rates available to savers and the volume and timing of firms' communications to savings customers. However, despite these improvements, the review of fair value assessments has shown that many firms have found the assessment of value challenging and the largest firms generally continue to pay below the market average for standard easy access products. The FCA reminds firms that they should be carefully reviewing its good and poor practice examples. The FCA also expects firms to improve fair value assessments over time and the FCA will take appropriate action where it considers this is not the case.

The FCA will continue to closely monitor firms' future savings rate changes and will expect a clear explanation where it identifies that a firm has changed its savings rates significantly more quickly and fully in response to interest rate reductions, compared to previous interest rate increases. The FCA explains that while it will continue to monitor how well the savings market is operating, it does not anticipate providing further savings updates unless it identifies further market-wide concerns not addressed within this publication.

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