MSE News: Watch what happens when your bond ends, savers warned

Former_MSE_Darryl · 26 September 2012 at 5:37PM

"Savers with fixed rate bonds are being warned they could be missing out when their bond's term ends..."

Read the full story:

Watch what happens when your bond ends, savers warned

cmorgan091 · 26 September 2012 at 6:13PM

Is there a rate error in the article? It says 4.57% average for 2 year bond and 4.6% for a 5 year.

I would love a 4.57% rate for 2 years, but alas I fear you meant to write 3.57%...

Chris

Ken68 · 27 September 2012 at 7:40AM

Thank you Darryl for the heads up. Not yet happened to me but tis the sort of thing to watch.

opinions4u · 27 September 2012 at 8:51AM

Most term deposits do exactly what they say they'll do when they mature.

The customer gets this information up front. Together with a maturity letter nearer the time.

Seems fair to me.

kevin52 · 27 September 2012 at 9:33AM

Time to name and shame.
This has happened to my 88 year old father when he didn't take action on a maturing bond and it is now frozen.
This was with Santander, no surprise there.
And I don't think it is fair to exploit peoples age or disorganisation or forgetfulness.

SallyG · 27 September 2012 at 9:51AM

http://www.citywire.co.uk/money/fixed-rate-savers-watch-out-for-this-end-of-term-trick/a621750?re=20739&ea=322185&utm_source=BulkEmail_Money_Daily_Summary&utm_medium=BulkEmail_Money_Daily_Summary&utm_campaign=BulkEmail_Money_Daily_Summary

innovate · 27 September 2012 at 9:56AM

opinions4u wrote: »

Most term deposits do exactly what they say they'll do when they mature.

The customer gets this information up front. Together with a maturity letter nearer the time.

Seems fair to me.

I second that.

People need to take more responsibility for their own affairs.

ses6jwg · 27 September 2012 at 11:18AM

kevin52 wrote: »

Time to name and shame.
This has happened to my 88 year old father when he didn't take action on a maturing bond and it is now frozen.
This was with Santander, no surprise there.
And I don't think it is fair to exploit peoples age or disorganisation or forgetfulness.

This is simply not true.

When a Santander bond ends, it is automatically re-invested into a "fixed rate REWARD bond".

This pays a flat rate of 1% + usually around 1-2% if left untouched for another 12 months.

This bond can be closed at any time but the holder only earns 1% before maturity.

The only other explanation is that he asked them to reinvest and can't remember doing it, but there should be signed paper work.

Otherwise the branch has either made an error and put the wrong bond code in, or they've been very naughty and reinvested into a fixed rate bond when they shouldn't have.

If the bond has been reinvested into a fixed rate bond, there should be signed paper work in the branch confirming as such. If this paperwork isn't present, you have grounds for a complaint.

opinions4u · 27 September 2012 at 11:36AM

kevin52 wrote: »

Time to name and shame.
This has happened to my 88 year old father when he didn't take action on a maturing bond and it is now frozen.
This was with Santander, no surprise there.
And I don't think it is fair to exploit peoples age or disorganisation or forgetfulness.

So what should they do?

Stick it in the bog standard easy access account - and get accused of exploitation by those who wanted a term deposit rate? Send a cheque back (that could sit unopened for weeks if somebody's disorganised) and get accused of creating work for the customer? FP it to a current account where it earns nothing?

All of them do exactly what they said they'd do in the T&Cs. All of them do exactly what they said they'd do in the maturity letter. This isn't exploitation. It's doing what it says on the tin.

I don't like the model where it goes in to yet another term deposit with no access, but they do warn you.

C&G do this but I think they give you two ways out - penalty free within 30 days of the maturity date and then subject to penalty after that point.

There is no way that there should be an "industry standard" for what happens on maturity. Just compliance with the terms and conditions, fair notice of reminder of maturity and acting on the customer's instructions.

Former_MSE_Helen · 27 September 2012 at 11:46AM

Hi Chris (cmorgan091),

Thanks for pointing that out. We've now replaced those figures with Moneyfacts' average rates from today:

A typical fixed-rate bond has a current average rate of 3.03% for two years and 3.59% for five years.

MSE Helen

Consumerist · 27 September 2012 at 5:55PM

opinions4u wrote: »

There is no way that there should be an "industry standard" for what happens on maturity. Just compliance with the terms and conditions, fair notice of reminder of maturity and acting on the customer's instructions.

Unfortunately, unless financial institutions are required to meet a "standard" they are prone to exploit customers by burying information in Ts&Cs - often contained in several documents these days.

I know, I know, we should all read the volumes of Ts&Cs of all the financial institutions before we finally risk investing but, for heaven's sake, some of us have a life to be getting on with.

Maybe savings accounts do what they say on the tin (legally speaking) but the label on that tin is absolutely humongous.

MSE News: Watch what happens when your bond ends, savers warned

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