The City regulator is considering taking action to improve interest rates for millions of people with money in poor-paying savings accounts, it has emerged.
In a new report, the regulator said loyal long-term customers were typically earning less than half the amount of interest being paid to newer savers.
The FCA said in the coming months it would be looking at whether it needed to intervene in the market "to ensure competition is working in the interests of consumers".
The FCA said its preliminary view was that while some aspects of the sector were functioning well, "competition does not appear to be working in the interest of many consumers".
One of its headline findings was that because many savers do not shop around, banks were able to pay lower interest rates to customers who had stuck with the same account for a number of years.
It found that at the end of 2013, the average interest rate on "easy access" savings accounts opened within the previous two years was around 0.8% while the equivalent rate for accounts opened more than five years before was less than 0.3%.
"While some consumers may switch away in response to the lowered rates, a large proportion of consumers do not," the interim report said.
The regulator said banks and building societies had various strategies that could enable them to pay different rates to different types of saver. They can offer higher rates to new customers who may be more active, and lower rates to those who "demonstrate they are more passive".
It also found that the high street banks, which dominated the current account market, were able to attract a large chunk of easy access savings cash despite typically offering much lower interest rates.
The average rate offered by the leading current account providers on instant access-style saving accounts opened in the last two years was around 0.5% while the equivalent rate offered by other institutions was 1.2%.
"This suggests the larger personal current account providers may be protected from vigorous competition in the supply of easy access products," the FCA said. It acknowledged that many people preferred to manage most or all of their financial products through one branch or a single internet banking system.
Discussing the next steps it may take, the regulator said: "We will consider how intervening to improve the rates paid to consumers with older accounts would affect the interest rates paid on more recently opened accounts.
"We are not convinced that improvements to the terms for some consumers would be cancelled out by worse terms at the time an account is opened."
The final report is due to be published later this year. Possible measures include policy or regulatory changes, amendments to the rules and new guidance.
Average offered by leading account providers such as high street banks on instant access accounts opened in the past two years
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