It is more important than ever, with increasing cost of living pressures, for firms to ensure their customers are receiving fair value on their savings.
We note that some firms have raised the rates of existing savings products, and others have taken positive steps to communicate with their customers to ensure they know the best rates available to them. However, too many customers are sitting on low rates or not accessing products that may offer better value.
Some firms have queried whether data protection regulations prevent them from telling savings customers about better deals. This is not the case. We set out FCA and ICO positions below for clarity.
In brief
Firms can provide regulatory communications to all their savings customers that provide neutral, factual information about the interest rate and terms of the savings product they hold, the interest rate and terms of other available savings products, and what their options are for moving to another product.
Data protection law (the UK GDPR and Data Protection Act 2018) and the Privacy and Electronic Communications Regulations 2003 (PECR) do not stop firms from sending these regulatory communication messages.
However, firms must still ensure that they comply with data protection requirements when using information about people.
In detail
Direct marketing and regulatory communications
Data protection law provides people with a right to object to direct marketing. However, this does not prohibit firms from providing communications to their customers when requested or required by a statutory regulator, such as under the FCA’s Consumer Duty (see below). This is true even where customers have ‘opted out’ of direct marketing.
The ICO’s guidance on direct marketing and regulatory communications explains how to draft such regulatory communications, and includes illustrative examples. To help ensure compliance, firms should use a neutral tone and avoid active promotion or encouragement when communicating facts about saving product options to these customers.
Communications required under the Consumer Duty
The FCA’s Consumer Duty includes rules and guidance relating to how firms communicate with their customers. These aim to ensure customers are given the information they need, at the right time, and presented in a way they can understand. For example:
- PRIN 2A.5.3R requires firms’ communications to equip their retail customers to make effective, timely and properly informed decisions; and
- PRIN 2A.5.5R requires firms to communicate at suitable points throughout the lifecycle of a product.
The FCA’s finalised guidance on the Consumer Duty sets out how firms can use their communications to support good retail customer outcomes. There is flexibility for firms to decide how best to achieve this objective. To comply with the Duty they will, however, need to make savings customers sitting on low rates aware of higher rate products the firm has that may better serve their financial objectives. They will also need to be able to show, through their testing and monitoring activity, that their engagement strategy is effective in practice and delivers good outcomes.
Applying the guidance in practice
Firms can provide regulatory communications to all their savings customers that provide neutral, factual information about the interest rate and terms of the savings product they hold, the interest rate and terms of other available savings products, and what their options are for moving to another product.
There are also other approaches available to firms which could be adopted to engage their customers and support effective decision making, such as displaying the regulatory communication on their website.
Conclusion
We expect that this letter – and existing guidance materials – provides sufficient clarity for firms to support saving customers through their communications. The FCA will be paying close attention to firms’ engagement strategies to support their savings customers to achieve good outcomes. At the end of July, the FCA will report its updated view of how well the cash savings market is supporting customers.
Sheldon Mills, Executive Director, FCA
Stephen Almond, Executive Director, ICO
