Consent not needed to offer customers better savings rates, UK banks told

The Information Commissioner’s Office (ICO) and Financial Conduct Authority (FCA) said data protection law does not present a barrier to the provision of such information – addressing industry uncertainty that had arisen on the issue.

In a joint letter to trade bodies UK Finance and the Building Societies Association, the ICO and FCA said that to comply with the new consumer duty, firms will “need to make savings customers sitting on low rates aware of higher rate products the firm has that may better serve their financial objectives” and further “be able to show, through their testing and monitoring activity, that their engagement strategy is effective in practice and delivers good outcomes”. They said firms can meet those obligations while still complying with UK data protection law and rules on direct marketing set out in privacy and electronic communications regulations.

They said: “Firms can provide regulatory communications to all their savings customers that provide neutral, factual information about the interest rate and terms of the savings product they hold, the interest rate and terms of other available savings products, and what their options are for moving to another product.”

Information law expert Alex Ha Kyung Kim of Pinsent Masons said: “This is another piece of helpful guidance from the regulators following on from the ICO’s earlier guidance on direct marketing and regulatory communications.”

“Sometimes it may feel like data protection laws are at odds with financial regulations – or indeed other regulatory requirements – which further adds to the burden of achieving compliance. In that regard, it is comforting to see the two regulators working together to make this joint announcement on what is a very real and present issue for financial organisations and their customers. Organisations should take note of this announcement to further update their internal guidelines, policies, or playbooks on direct marketing,” he said.