UK Financial Conduct Authority (FCA) to Investigate Fair Value Assessments of Lenders
In an effort to ensure that consumers are being provided with appropriate savings products, the UK Financial Conduct Authority (FCA) has announced its intention to analyze “lenders’ fair value assessments”.
Earlier this year, the FCA highlighted the gap between the interest rate returns that banks receive and what they offer to deposit holders. The regulator criticized banks for their slow decision-making in adjusting rates, revealing that they were earning significantly higher rates on parked cash than what they were providing to customers.
The FCA has recently taken on a new statutory duty for consumer protection, and it seems that it is now prepared to take further action regarding the lackluster savings rates offered by some firms.
In a public statement, the FCA explained its position:
“We have concerns that not all savers are receiving good deals, which is why we required nine firms to provide us with assessments of the value their savings products offer. This requirement follows the introduction of the Consumer Duty in July, which obligates firms to ensure that their products and services deliver fair value to customers, and to take action if they do not.
We will now analyze the information provided by banks and building societies and will publish an update later this autumn, which will include any measures we may take if we identify areas of concern.
In July, we outlined a 14-point action plan aimed at ensuring a competitive savings market. We are making progress on each of these points and will provide a separate update in the autumn.”
The FCA acknowledged that since the plan was published, rates have improved. However, the regulator also emphasized the importance of a more competitive market and encouraged individuals to shop around for the best deal.
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