The Financial Conduct Authority (FCA) has launched a 14 point plan to ensure banks are passing on the best savings rates to their customers.

The plan follows a review of the cash savings market last month, when the watchdog found that while rates on savings accounts are rising, rates for easy access accounts are rising more slowly.

Nine of the UK’s biggest savings providers only passed through 28 per cent of the base rate rise to their easy access deposits between January 2022 to May 2023, while for fixed term deposits they passed on around 51 per cent of the base rate over the same time frame.

The FCA also found that larger firms offer lower interest rate savings than their smaller competitors.

Banks offering the lowest savings rates will have to justify how these rates offer customers fair value under the new Consumer Duty rules which was introduced on Monday.

As part of the new plan, firms will also need to “step up” their communication with customers to inform them about the best options, even when they have opted out of marketing communications.

Additionally, the FCA will review firms’ performance on cash ISA to cash ISA switching and conduct further analysis into the contribution of cash savings to firms’ profitability.

“We want a competitive cash savings market that delivers better deals for savers, where interest rates are reviewed quickly following base rate changes and firms prompt savers to switch to accounts paying higher rates,” said Sheldon Mills, executive director of consumers and competition at the FCA. “We welcome the progress that has been made so far but this needs to speed up.”

He added: “We will be using the Consumer Duty to ensure this is the case – with firms required to prove to us that they are offering their customers fair value.”

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