The gap between the average closed rate and live rate now stands at 0.31% in July 2024, up from 0.08% in July 2022.
The average ‘live’ easy access savings account currently pays 3.13%, while the typical ‘closed’ account pays 2.82%.
For a saver with a balance of £10,000, they could earn an additional £31 in interest over 12 months simply by switching, based on average rates. However, the top-paying accounts on the market offer around 5%, so savers could be earning a much higher £500 a year in interest.
Analysis of savings accounts by Moneyfactscompare found that savers are being short-changed ahead of ‘Consumer Duty’ rules on closed products and services come into play this month.
The Financial Conduct Authority (FCA) Consumer Duty rules for open products and services came into effect in July 2023, with the duty for closed products and services coming into effect on 31 July 2024. This includes easy access savings accounts which are no longer on sale to new customers.
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Researchers found that over the past two years, the incentive to switch from a closed savings account to a live deal has grown substantially.
‘Savers must shake their apathy’
Rachel Springall, finance expert at Moneyfactscompare, said: “Savers are being short-changed if they don’t proactively review and switch from their closed easy access accounts.
“Over the past two years, the average rate on a live easy access account has surpassed the average closed rate, despite base rate rises from the Bank of England and numerous calls for the biggest banks to improve savings rates for existing customers. Savers must shake any apathy they have to move their pots, otherwise they will be left disappointed when their loyalty is not rewarded.”
Springall reminded savers that some of the biggest high street banks pay less than 2% on their most flexible live easy access accounts, while some of the top rates on the market overall pay around 5%.
“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. 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,” she said.
When Consumer Duty rules on closed products come into force on 31 July, financial firms’ closed products and services “will need to be compliant with its expectations under the Consumer Duty price and value outcome”. This includes “an easy access savings account which is no longer on sale to new customers”.
Springall added: “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.”
