British financial regulators announced that they will be reviewing the savings market in that country to determine whether there’s adequate competition, as it aims to ensure financial markets are working well for consumers.
The UK’s Financial Conduct Authority (FCA) announced that it will look at a range of issues in the savings markets, including the effects of ‘teaser rates,’ and how often consumers switch their savings accounts. It says it’s keen to assess what it can do to ensure firms offer consumers the best possible returns, and proper disclosure.
“Promoting effective competition and ensuring that markets work well for consumers is a key objective for the FCA,” notes FCA chief executive, Martin Wheatley.
In taking on the savings markets first, it will be examining a market that affects most consumers. “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,” Wheatley says.
The regulator says that market studies such as these will enable it to take a holistic look at competition in a market, assessing how consumers and firms behave and interact.
“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,” says Wheatley.
The FCA says it will also be considering whether a market study is required on annuities. And, it says that early next year, as part of a ‘wholesale strategic review,’ it will look at the way competition works between firms in financial services to ensure that consumers get a better deal.