Karim Haji, Head of Banking, KPMG UK responds to the FCA’s discussion paper on introducing a basic savings rate in the cash savings market.
Responding to the FCA’s discussion paper on introducing a basic savings rate in the cash savings market, Karim Haji, Head of Banking, KPMG UK says:
“Customer inertia remains one of the strongest forces in banking. At a time when a fifth of families spend over 60% of their income on pay day, it is right that the regulator looks at what more can be done to help consumers make the most of their money.
“There is however a balance to be made here, the sector will want to make sure enough time is allowed to let past actions play out. Open banking is still in its infancy and whilst it hasn’t had the desired effect yet, as consumers become increasingly comfortable with the idea, its potential is huge. We have to remember that there was a time when people were afraid to shop online, but today the high street is fighting for survival.
“Further, we are braced for an interest rate rise which in itself will be good news for savers. That said, increases will be minimal and take a while to filter through to savings so it is understandable that the FCA isn’t relying on interest rates alone to boost rates. If a basic savings rate is introduced, the regulator would no doubt be keeping a keen eye to make sure the basic rate doesn’t become the go-to rate, even as interest rates rise.”
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