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FCA to investigate cash savings market

The Financial Conduct Authority (FCA) is to carry out a market study into the £1 trillion UK cash savings market.

The study will look at a range of issues including the effects of ‘teaser rates’ and how often consumers switch their savings accounts. More than 80% of adults in the UK have some sort of cash savings account, so the FCA is keen to assess what it can do to ensure that firms offer consumers the best returns possible and information that meets their needs.

FCA chief executive, Martin Wheatley, explains: “Promoting effective competition and ensuring that markets work well for consumers is a key objective for the FCA.

“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.”

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