The BSA supports the FCA’s aims of promoting competition and improving consumer outcomes in the cash savings market. From our members’ perspective, the cash savings market is highly competitive and building societies compete by providing high standards of customer service and interest rates which are, on average, significantly higher than their competitors, on both front and back books. While building societies compete across all distribution channels, the sector remains predominantly branch-based.

We concur with much of the FCA’s analysis although we would observe that the ‘harm’ it identifies is confined to certain areas of the market, rather than spread evenly across all providers or savers. Accordingly, we challenge the blanket nature of the remedies the FCA is contemplating. We fear the proposed basic savings rate, while superficially alluring, would have unintended negative effects that would outweigh any potential benefit. These would likely be felt especially by building societies and their members and could impact the viability of the branch networks so highly valued by many building society members.

We are urging the FCA, instead, to adopt a more targeted and proportional approach, focused on those consumers which it identifies as suffering substantial detriment and the firms which are responsible for that.

Read the full response here.