Savers ‘short-changed’ on easy access accounts that are closed to new business
Customers need to see if they are getting a ‘raw deal’, according to Moneyfactscompare.co.uk, which carried out the analysis.
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Your support makes all the difference.Savers have typically been earning lower rates of interest on easy access accounts which are closed to new business than the equivalent rates on “live” deals, according to analysis from a financial information website.
Moneyfactscompare.co.uk, which carried out the analysis, warned that some savers may find they are being “short-changed”.
The website looked back over two years – and said the incentive to switch from a closed savings account to a live deal has grown substantially.
It said the difference between the average closed rate and live rate on easy access accounts has widened from 0.08 percentage points in July 2022 to 0.31 percentage points in July 2024. The margin was as wide as 0.66 percentage points in October 2023, the research found.
Later this month, the consumer duty, which is overseen by the Financial Conduct Authority (FCA) will apply to closed financial products.
Savers are being short-changed if they don't proactively review and switch from their closed easy access accounts
The duty, which requires financial firms to put customers at the heart of what they do, including when designing products, comes into force for closed products from July 31.
Closed products under the FCA’s definition were those which were sold before July 31 2023 but have not been marketed or sold to new customers since.
The consumer duty came into force for on-sale products in July 2023 but firms were given an extra year to get to grips with older systems.
Moneyfactscompare.co.uk’s analysis was based on someone having a £10,000 deposit.
Rachel Springall, a finance expert at Moneyfactscompare.co.uk, said: “As the FCA’s consumer duty deadline for closed products nears, it is worth noting that not every institution has a closed savings account, but, if they do, customers need to see if they are getting a raw deal.
“The average rate for an easy access account that is closed to new business is 2.82%, compared to the live easy access rate which is 3.13%, so those with a balance of £10,000 could earn an additional £31 in interest over 12 months simply by switching, based on average rates.”
The Bank of England is expected to cut the base rate at some point in the months ahead, which could also lead to some savings rates reducing.
Savers must shake any apathy they have to move their pots, otherwise they will be left disappointed when their loyalty is not rewarded
Ms Springall said: “Savers are being short-changed if they don’t proactively review and switch from their closed easy access accounts.”
She added: “Savers must shake any apathy they have to move their pots, otherwise they will be left disappointed when their loyalty is not rewarded.”
Several challenger banks and building societies are working hard to entice savers, she said, while some big high street banks are paying less than 2% on their most flexible live easy access accounts. Some of the top rates on the market overall pay around 5%, Ms Springall added.
Principality Building Society, for example, has a “triple access” savings account with a bonus rate paying 5.00% interest, while Paragon Bank has a “double access” savings account paying 4.91%. Deals are subject to terms and conditions.
Ms Springall said: “Building societies and challenger banks continue to work hard to entice new deposits and reward loyal customers so they are worth comparing against the more familiar high street brands.
“In the months ahead, it will be interesting to see if any savings providers pull closed savings accounts or move customers on to different products as consumer duty rules on closed products come into force.”