Savers “short-changed” on closed easy access accounts: Is it time you switched?

The Financial Conduct Authority is set to extend Consumer Duty rules to closed products and services from the end of this month, but savers shouldn’t be complacent.

Savers may be missing out on greater returns as they let their hard-earned cash idle in poor-paying closed accounts, latest analysis from Moneyfactscompare.co.uk revealed.

Our team of experts reported a 0.31 percentage point difference between the average rate offered by a live easy access account (3.13%) and a closed easy access account (2.82%) at the start of July. This could be costing those with a balance of £10,000 an additional £31 in interest over 12 months.

While the gap between average live and closed easy access rates narrowed from 0.53 percentage points since the start of the year, it remains significantly larger than two years ago. In July 2022, the average closed easy access account paid 0.51% - just shy of the average live easy access rate (0.59%).

“Savers are being short-changed if they don’t proactively review and switch from their closed easy access accounts,” commented Rachel Springall, Finance Expert at Moneyfactscompare.co.uk. She encouraged consumers to “shake any apathy” towards moving their savings pots at the risk of being “left disappointed when their loyalty is not rewarded”.

Is it time to switch?

Having introduced Consumer Duty rules for open products and services last year, the Financial Conduct Authority (FCA) is set to extend the duty to closed products and services as of the end of this month (31 July 2024). According to the FCA, this will require banks and building societies to “demonstrate that they are providing fair value to customers in closed products and services”.

“In the months ahead, it will be interesting to see if any savings providers pull closed savings accounts or move customers onto different products as Consumer Duty rules on closed products come into force,” said Springall.

In the meantime, savers shouldn’t be complacent. Many of the UK’s biggest high street brands, including Barclays Bank, HSBC, Lloyds Bank, NatWest and Santander, continue to pay less than 2.00% on their most flexible live savings accounts.

Meanwhile, the very best easy access accounts offer around 5.00%.

“Despite using a trusted brand, the convenience of leaving cash in an easy access account can mean missing out on higher interest rates elsewhere, so it is imperative savers ditch and switch to a better return,” urged Springall.

“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.”