Savings Account Customers To Be Informed Of Rate Changes

Savers must now be notified if their bank makes plans to slash interest rates under

new rules from the Financial Services Authority (FSA), which came into force on May 1.

Banks have been warned they will face action from the FSA if they fail to abide by the new set of rules surrounding interest rates.

The new rules mean that any bank or building society that wishes to make changes to interest rates paid on current accounts and savings accounts products must inform all customers giving them the opportunity to switch bank accounts beforehand.

Something else savers will be happy to hear is that account providers must now also make their customers aware when any introductory bonus rates are due to expire, reminding savers that the rates paid on their savings are likely to drop right down, so it may be time to move on.

The new regulations, which cover most easy access accounts, cash Isas, fixed rate bonds and other types of notice accounts, were first announced in November last year as an attempt to tighten the rules for banks accused of misinforming their customers, and mean banks must give at least two months notice before making any changes to interest rates.

The FSAs director of conduct risk - Dan Waters, said: New regulations will put banking customers in the driving seat by setting down clear standards that people can expect from their institution, like speeding up payments between accounts, adequate notice of changes in terms and conditions, and smoothing the procedure for querying an unauthorised or unexpected transaction.

If firms fall short of these standards or fail to treat their customers fairly, the FSA will take action.

However, banks are not obliged to tell customers if the rate rises by less than base rate or any rate changes linked to Bank of England base rate.

by: Sam Gooch

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