A consumer group has made a super-complaint against ISA providers, claiming that savers were losing out on up to £3 billion of interest because of the way the market operated.
Consumer Focus accused cash ISA providers of using headline-grabbing rates to lure in savers, but these were typically slashed after the first year, leaving people with uncompetitive returns over the long term.
It said consumers also faced unfair obstacles if they tried to transfer their account to another provider, due to what it described as "poor and bureaucratic processes".
Research carried out by the group found that in a third of cases it took more than five weeks for people to transfer their accounts, with only one in 10 transfers completed in less than two weeks.
At the same time, it said it was often difficult for savers to find out how much interest they were receiving, as people often did not know the name of their account, particularly if they had had it for many years and it had been renamed or superseded.
The average ISA is currently paying returns of 0.41%, but the rates available range from 0.05% to 4.6% for a five-year fixed-rate ISA. But despite the large differences between the returns on offer, only 12% of ISA holders switched provider during the past tax year.
Mike O'Connor, chief executive of Consumer Focus, said: "Cash ISAs are designed to encourage long-term saving, but many people find their rates slashed to next to nothing after a relatively short time.
Providers are using consumer inertia and confusion to drop ISA rates faster than on other accounts. The way providers inform customers about their accounts makes it difficult to get the best deal."
The group has submitted a super-complaint to the Office of Fair Trading, which now has 90 days in which to respond.
It is calling on the OFT to address the unnecessary delays people face when transferring ISAs, and to put an end to what it terms price-baiting, under which consumers are lured into products by introductory rates which soon fall.