The City watchdog has launched a new campaign encouraging savers to shop around for the best savings rate as customer inertia continues to prevent customers from locking in higher rates.
According to a survey from the Financial Conduct Authority (FCA), just over half (52 per cent) of savers said they had switched savings accounts or were considering switching. Nearly two thirds (69 per cent) would consider switching.
To encourage customers to take the jump, the FCA will launch a £600,000 campaign highlighting how quickly customers can find a better rate.
“We know that people can be put off switching for a variety of reasons, but they could be making their money work harder,” Sheldon Mills, executive director of consumers and competition at the FCA, said.
“There are some great rates out there and it could take as little as 5 minutes to find a better deal.”
Banks came under intense pressure from politicians and regulators last year for failing to pass through the Bank of England’s rate hikes into savings products.
Interest rates were raised from just 0.1 per cent at the end of 2021 to 5.25 per cent last summer.
According to the FCA research last summer, the nine largest banks only passed through 28 per cent of the base rate rise to easy access deposits between January 2022 and May 2023.
Reflecting the poor deals on easy access accounts, customers have sought out better deals in fixed-term accounts.
From July 2023 to December 2023, the amount held in non-interest-bearing accounts dropped by £13bn and in easy access accounts, which typically have lower interest rates, by £9bn. Deposits in fixed-term, which often come with higher rates of interest, increased by £24bn.
Although savings rates improved, they are on their way back down again as markets expect the Bank to start cutting interest rates this summer.
Adam Thrower, head of savings at Shawbrook said: “In the past year, savings rates hit their highest point in over a decade. It’s disheartening that many people haven’t seized this opportunity and maybe losing out on hundreds of pounds in missed interest.”
According to Moneyfacts, the average rate on an easy access savings account stands at 3.18 per cent. On a one-year fixed deal the average rate is 4.60 per cent.