What new ‘truthful worth’ financial savings charge guidelines imply for you: SYLVIA MORRIS
The clock is ticking for savings providers. They now have just a few weeks left to get their act together and start offering loyal customers a good deal.
That is because from July, the new so-called Consumer Duty rules, which require all financial services firms to offer their customers ‘fair value’, will apply to old savings accounts as well.
The regulations were put in place by the watchdog the Financial Conduct Authority (FCA) last July, but savings providers were given a year to apply them to old accounts as well. But, sadly, I warn you this is no time to breathe a sigh of relief.
But, sadly, I warn you this is no time to breathe a sigh of relief.
In fact, checking your rate regularly to make sure you are not losing out will be as important as ever in the run up to — and after — the rule change.
Rule change: From July, the new so-called Consumer Duty rules, which require all financial services firms to offer their customers ‘fair value’, will apply to old savings accounts as well
To me, it should mean providers must pay the same rate to loyal savers as they do to new ones.
Wouldn’t that make life so much easier? But the FCA says it is not a price monitor and is not asking providers to do so.
In the run up to the deadline, providers are working to change their products or come up with a methodology to show they are offering fair value.
In the meantime, many providers still offer stingy rates to old customers while giving new ones great deals.
Some offer the same rates to old and new. But that doesn’t mean customers are getting the best deals. And surprisingly, in some cases, old customers get better rates than new ones.
Check the best cash Isa rates in our savings tables
In the run up to the deadline, providers are working to change their products or come up with a methodology to show they are offering fair value.
In the meantime, many providers still offer stingy rates to old customers while giving new ones great deals.
Some offer the same rates to old and new. But that doesn’t mean customers are getting the best deals.
And surprisingly, in some cases, old customers get better rates than new ones.
See what I mean about having to keep a beady eye on your rates to get a good deal: there is no rule of thumb to determine which type of account will offer you the best value.
Among the worst is Virgin Money, which still gets away with paying as little as 0.25 per cent to 1.75 per cent on some of its old easy-access accounts.
If you are unlucky enough to be in one, switch to a better deal.
Even if the bank increases the rates before the new rules on closed accounts come in, they are unlikely to pay top rates. New savers with the bank in a similar account can earn as much as 4.75 per cent.
You might be lucky and find you earn more than the rate offered to new savers.
There are 2,000 or more easy-access accounts now closed to new savers. If you’ve got one of them, check your rate now.
