13 February 2017
Is the new summary box for savings accounts working?
Late last year, the FCA introduced a new mandatory ‘summary box’ for savings providers.
No one was doing a perfect job at the time, but some providers were getting there.
Is the new rule now restricting their ability to communicate clearly?
The new requirement
Savings summary boxes follow a specific Q&A format laid out in the FCA's banking rulebook. There are a fixed set of questions, and certain information must be provided as a response to each of these.
Each firm must provide information about their product in “clear, easily understandable language and in a prominent way.”
This all sounds fine in principle. The problem is that the prescribed format isn't quite spot on. But firms have no wriggle room to make improvements under the current rules.
What are the problems?
The summary box is fairly long once all the required information has been packed into it. This has the unfortunate side effect of ‘burying’ some important information quite far down the page.
And the questions don’t always match up with the content which has to be supplied as a response.
For example, under the heading ‘Can I withdraw money?’ companies must explain any restrictions or consequences, such as fees, for taking money out of the account. That’s useful information to have, and it seems appropriate to include it in that section.
For fixed-term savings accounts, this section also needs to include an explanation as to what happens to the money at the end of the fixed term. But 'Can I withdraw money?' doesn't really relate to that.
‘What happens to my money after the fixed term?’ could be included as a separate question for fixed term accounts, and would make far more sense.
The same goes for questions like ‘Can I make further deposits?’ – the answer to which is, for now, trapped under the heading ‘What might the future balance be?’
Clear and understandable language
Some organisations are still doing a better job than others at using clear language:
“If there is insufficient earned interest to cover the early access charge then the charge will be taken from the funds in the account.”
That's from Nationwide's new summary box. It probably doesn’t fulfil the ‘clear and understandable’ language criteria. It's quite convoluted – and very formal.
The new rules are clearly geared towards making products easier for customers to understand. To make that a reality, banks and building societies also need to be making an effort to change the way they talk to their customers.
These summary boxes are not optional. But that doesn’t mean providers aren’t
allowed to also supply key information in other ways. Currently, companies are looking to be in step with the new regulation – which means summary boxes are front and centre, at the expense of clarity at times.
The idea itself isn’t necessarily a bad one. But some tweaks are needed, and perhaps firms could be given a bit of leeway with the format, to make sure that these boxes are genuinely helpful for customers.