Loyal bank savers don't get the best rates, says regulator

Challengers such as Virgin Money and Metro Bank still account for less than 5pc of deposits in the UK, according to figures compiled by the Bank of England.

“While some aspects of the cash savings market are working well, competition does not appear to be working in the interest of many consumers,” said Christopher Woolard, director of policy, risk and research at the FCA in London.

“In this market there is a minority of very active, very engaged consumers who regularly change provider to get the best deal. We want to look more closely at what is inhibiting the majority of consumers from getting better deals.”

The regulator will continue to investigate the cash savings market before deciding whether it should intervene to ensure competition. The final report will be published later this year.

Research from consumer group Which? found that bank customers are missing out on £4.3bn each year by leaving savings in poor value accounts.

Which? executive director, Richard Lloyd, said: "While the regulator continues to investigate this market we think providers should scrap the savings trap and do more to help people make the most of their money.

"Banks should be crystal clear about interest rates, let people know when bonus rates come to an end and make it easier for people to switch ISAs (individual savings account)."

Switching a current account to a new bank or building society became easier last September, when a seven day switching guarantee was introduced. The Payments Council, which manages the service, said in April that there were 609,300 switches from October to March, a 14pc increase on the previous year.

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