FCA Consumer Duty and UK Savings Rates: What the Price and Value Rules Actually Require

The Bank of England's Monetary Policy Committee voted 6-3 to hold Bank Rate at 3.75% on 17 September 2026, the sixth consecutive hold. For savers, that headline number matters less than a separate, less-reported question: whether the rate sitting on their own easy-access account or cash ISA reflects fair value under the FCA's Consumer Duty, regardless of what the Bank Rate itself does next.

The relevant rule is the Price and Value outcome, set out in the FCA Handbook at PRIN 2A.4 and first elaborated in the regulator's July 2022 non-Handbook guidance, FG22/5. It's worth being precise about what this rule actually requires, because it's easy to overstate. PRIN 2A.4 does not fix a minimum percentage of a Bank Rate move that a savings account must pass through to customers, and it doesn't cap the margin a bank can earn on deposits. What it requires instead is that a firm can demonstrate, with evidence, that the price a customer pays — or in a savings account's case, the rate they're paid — represents fair value relative to the benefits of the product, taking into account the firm's own costs and a reasonable profit margin.

That's a principles-based test, not a formula, and the distinction matters for anyone reading a headline claiming the FCA has set a specific target pass-through rate for any category of account — it hasn't, and doing so would run against how the Duty itself is written. What the rule does force is a shift in where the burden of proof sits: rather than a saver having to prove they've been treated unfairly, firms have to actively assess and document why their pricing is fair, and be ready to show that assessment to the regulator on request.

The Duty has applied to open products — those still being actively sold to new customers — since 31 July 2023, and to closed products, including older accounts a firm has stopped marketing but still administers, since 31 July 2024. That second date is the one that matters most for the practice the FCA has spent several years flagging: so-called back-book pricing, where a bank pays a markedly lower rate on an older, closed savings product than it offers new customers opening the equivalent account today.

The FCA's own published cash savings reviews give a genuine, sourced picture of how this plays out in practice, rather than requiring anyone to take the regulator's concerns on faith. Its September 2024 update on the cash savings market found that median rates on open easy-access accounts had improved by 0.5 percentage points since its July 2023 review, against just 0.4 points for closed accounts over the same period — a real, if modest, gap. The same review specifically named the practice of firms creating multiple tranches of a savings product that pay new customers more than existing customers holding an economically similar account, describing it as a pattern the FCA continues to scrutinise under the fair value rules.

None of this means every gap between a back-book and front-book rate is automatically a breach. The FCA's own findings have been explicit that firms experiencing rising margins as Bank Rate increased were, on the whole, passing a growing share of that benefit through to savers over time — the concern is a firm that can't explain a persistent, unjustified gap, not the mere existence of any gap at all. Fair value assessments are also expected to weigh factors beyond the headline rate, including a product's flexibility, any non-financial benefits, and the reasonable cost of administering it, rather than being a pure rate comparison exercise.

The FCA has also been explicit about asymmetric repricing — cutting savings rates quickly when Bank Rate falls while raising them slowly when it rises — telling firms it would expect a clear explanation if a firm changed its savings rates significantly faster and more fully in response to a rate cut than it did to a prior increase. With Bank Rate having now held for six straight meetings rather than moving in either direction, that specific asymmetry test isn't the live question right now — the more relevant one, given a stable but historically still-elevated base rate, is whether closed accounts continue drifting further behind open ones the longer a hold persists without an equivalent competitive pressure forcing a review.

Notice accounts and fixed-rate products sit somewhat outside this specific back-book dynamic, since their pricing is set at the point of sale against prevailing market rates and swap curves rather than adjusted after the fact — the fair value question there is mostly about whether the rate offered at launch was reasonable given market conditions at the time, not whether it's been quietly left behind since. Cash ISAs are subject to the same fair value expectations as their non-ISA equivalents; the FCA has not published a rule mandating rate parity between the two, but a firm paying materially less on a cash ISA than an equivalent non-ISA easy-access account would face the same burden to justify that gap under PRIN 2A.4.

Fair value under the Duty is also assessed independently of inflation, which is worth flagging since the two are easy to conflate. With headline CPI running at 3.1% in August, a nominal savings rate that a firm can justify as fair relative to its costs and its own front-book pricing can still leave a saver with a negative real return once inflation is accounted for — the FCA's price and value test doesn't reach that question at all, since it compares a firm's pricing against its own market and costs, not against the separate, macro question of whether cash is losing purchasing power in general.

For savers, the practical takeaway isn't a guaranteed rate floor — the Duty doesn't hand anyone that — but it does give a concrete basis for a specific, useful question to ask a provider: how does this account's current rate compare with what you're offering new customers for an equivalent product today, and if there's a gap, what's the justification? Firms are required to have an answer on file even if they're not required to volunteer it unprompted, and switching to a better-paying account, where one exists, remains the more reliable lever for an individual saver than waiting for a regulatory intervention on a specific account.