The public watchdog said yesterday that customers who haven’t switched their ISA accounts could be losing out on one to two per cent interest, or between £1.5bn to £3bn a year.
In a “super-complaint” made to the Office of Fair Trading (OFT), Consumer Focus said that high street banks and building societies use “bait prices to attract savings into cash ISA accounts” but make it difficult for customers to leave.
The OFT said that it will invite parties to give evidence in connection to the super-complaint and it will produce a response in three months time.
“The OFT will now consider the issues raised in the super-complaint in order to establish whether any feature, or combination of features, in the relevant market is or appears to be significantly harming the interests of consumers,” said the OFT?in a statement.
Consumer Focus also criticised regulation changes set to improve information on interest rate reductions and said the proposals will not fully address the identified issues over hidden barriers in switching accounts.
One third of the population have ISA accounts and have a total of £158bn saved, according to data by Consumer Focus.
It said that two-thirds of customers with ISA accounts have never withdrawn cash. The average savings rate on a cash Isa is 2.09 per cent, according to data provider Moneyfacts.