The Financial Conduct Authority (FCA) today published the first set of data showing the lowest-paying interest rates on a number of easy-access savings accounts across the industry. This publication forms part the FCA’s “sunlight remedy” that it is trialling over an 18 month period. It is designed primarily for market commentators and aims to bring to light firms’ strategies towards their long-standing customers. Frontier (Europe) advised Lloyds Banking Group (LBG) throughout the FCA’s market studies.
The FCA has recently undertaken two market studies into cash savings and general insurance add-ons. In its cash savings market study, the FCA found that accounts that have been open for longer period pay lower interest rates than those opened more recently. It has also found that a significant number of consumers did not move their money to accounts that might pay more interest, even with the same provider.
In its general insurance add-ons market study, the FCA found evidence of low levels of consumer engagement, switching and a lack of competition when some types of insurance policies are renewed. The FCA launched a large scale randomised control trial to test reactions to different types of information provided at renewal. Including last year’s premium had the greatest impact on switching. Earlier this month, the FCA published proposals to require general insurance providers to publish details of last year’s premium on renewal notices.
The FCA’s studies reflect the growing importance of behavioural economics and trialling in effective regulation and remedy design.
Frontier (Europe) advises LBG on its regulatory and commercial strategy, including the FCA’s market studies and the CMA’s investigation into retail banking.
For more information, please contact Goran Serdarevic on [email protected], or call 020 7031 7000.