santander shortchanging on Direct ISA issue 3 interest?

japonicaf

I am posting because I think Satander have paid me too little interest on an Direct ISA issue 3 which was supposed to have had a 1.5% bonus on it over the past 12 months. The sage goes back to March 2008 when I opened an Abbey Direct ISA issue 2 nd (after much hassle and delay at Abbey end, leading to a letter of apology from a customer services manager) and as well as using my ISA allowance for the year in it also transferred into it a sum from my HSBC account. The bonus on the ISA expired after a year, and so on 27 Feb 2009, with the annual interest due to be paid on 1 March, I phoned Abbey to discuss my next step. I was advised to switch the balance of the account to issue 3. I was told the bonus on issue 3 would run for 13 months from 28 Feb 2009 and that the interest rate was at that time 2.5 per cent.

Today, with the annual interest on issue 3 having been paid on 1 March, I phoned Santander and was told that the balance of over £30.5K had generated all of around £350 in interest over the year! Around 1.1 per cent interest And that the interest rate on the account is now 1%, and has been at this rate since April last year, having started off at 3% and swiftly declined to 1.5% and then 1%. And yet the information on issue 3 on the website says it has an introductory bonus rate of 1.5 per cent for 12 months, and that the "headline interest rate" is 2 per cent. Surely I am due more interest than has been paid.

I was sent to various depts on this and found the staff generally unhelpful. At least one of them seemed to have no record on their system that I had started off on issue 2 and then transferred to issue 3 after a year, when the bonus on issue 2 expired. One claimed that I had been on issue 3 all along, since 2008. And yet, another told me that issue 3 had not been introduced until Feb 2009 (does anyone know exactly when it was introduced?) The letter of apology I got in 2008 over the delay in transferring the HSBC funds to the ISA explicity specifically says I was in issue 2. One guy admitted that there seemed to be a mistake over the interest I have received, and has requested an "investigation" into rates payable on the account and the calculation of my interest rates, which apparently has to be done by the IT dept. When it's hardly a complex calculation, surely!

Has anyone else encountered a problem with calculation of interest with Satander Direct ISAs? I had been thinking of transferring issue 3 to issue 6 for the coming year up to interest payment date of 1 March 2011, but have lost confidence in the company and its lack of transparency. And I am not eligible to transfer the issue 3 to their attractive new 3.5 minimum ISA.

Consumerist

I have not actually had a similar problem to this but I would suggest that, as a first step, start their complaints procedure to ask them to provide details of the interest rates applied over the period concerned (rather than relying on verbal information of any sort).

Armed with this information you can compare it to what has been published on their website or elsewhere to see if the complaint needs to be pursued further i.e. through the Financial Ombudsman Service.

As a general rule for the future, never rely on any verbal information given by any bank. If you don't see it in writing (letter, email, website, etc.) then treat any information with the utmost suspicion. Always go through a banks Terms & Conditions with a fine-toothed comb. Do this before giving them any money.
.

japonicaf

Thanks for that, Consumerist. I was surprised on 27 February 2009 when the guy I spoke to at the Santander end of things simply transferred my balance from Direct ISA issue 2 to Direct ISA issue 3, with no form filling or anything, and nor was there any written confirmation from them by post. And now I see the account number remained the same. But I do have the paperwork that shows I had an issue 2 originally in 2008 (as stated in a letter from one of their customer relations people in June 2008 after I complained about the length of time it was taking to transfer my HSBC ISA to Abbey), which then became an issue 3 (as shown by an account statment). The guy on the phone in Feb 2009 told me with issue 3 I would benefit from a bonus for 13 months from 28th Feb 2009. But I'm now wondering why the account number stayed the same after the supposed transfer from issue 2 to issue 3. Or were the terms of the account simply changed to those of issue 3.... I have a horrible feeling there may be some kind of loophole that Santander will be able to exploit. Doing some online research today I saw an article in the Daily Mail from March last year which warned against ISAs which, like Santander issue 3, have a variable rate bonus. Maybe the bonus, which had started at 1.5%, was drastically reduced soon after I shifted to the account. One really has to keep one's eyes open to monitor rates as they evolve! Anyway, I'll see how it goes next week when I follow it up, via the complants procedure if necessary.

emeraldbugle

At 1 March 2009, the rates were 2.5% for over £1 and 3% over £9k. On the 1st April 2009 the rates changed to 2.0% for over £1 and still 3% over £9k.

You should be earning 3% at least, I would have thought. Does your statement definitely say Issue 3?

japonicaf

Thanks for the sequence of interest rates, emeraldbugle.

I rang up Santander again this morning, just to confirm that they had a record of my switching from Direct ISA issue 2, subscribed to in March 2008, to issue 3, and this time got a much more helpful person on the line. He confirmed that they DO have a record that I switched issues on 27th February 2009, and said I should have been receiving the bonus for 12 months, at the £9,000+ rate. He couldn't understand why I had received such little interest (as I said, at a total rate of around 1.1%), said there seemed to be an error, that the admin is looking into it and I should hear from them within a week or two.

He also said that looking through the record of the calls I made yesterday, he could see I had spoken to members of a newly trained and inexperienced team, whereas he has much longer experience of dealing with ISAs! This reinforces my general lack of confidence in Santander. Surely a team should be unleashed on the public only when trained up to the requisite standard. I would advise anyone with a Direct ISA issue 3, and any other Santander account come to that, to carefully check the amount of interest paid during the bonus period. The way the staff handled the issue yesterday was far from satisfactory - I was made to feel I was in the wrong, and that they wanted to dismiss the point I was making.

elektra

Have also had problems with this account when upgrading from issue 2 to issue 3

http://forums.moneysavingexpert.com/showthread.html?t=1524795 (post 14).
Despite a couple of phone calls they never applied the interest,
Last week I phoned and they said they would tell the dept to backdate interest to 1st March and it appears as though they did as it roughly matches my calculation.
I didn't have much confidence that it would get done though as I had to correct the girl on the phone about the date.

Added to that they reckon I can pay in £5,100 before April and yet I'm not 50.

Glad you finally got through to someone who sounds like he will sort out problem.

Please update post with the result.

japonicaf

That's useful info Elektra; looked also at the link to your post of last year. One of the people I spoke to at Santander yesterday was trying to make out that I opened an issue 3 in March 2008 - surely a year time before issue 3 was introduced - and that therefore I had never switched into it, and that the bonus had expired a year ago. I'm just glad I have the letter from Abbey of June 2008 stating the account was issue 2.

I'll update on the outcome of my query to Santander in due course. Santander's making the error over your ISA 5,100 eligibility for 09/10 is another example of their woeful inattention to detail! I hope they'll cope OK during the imminent busy ISA "season", otherwise there are going to be a lot of exasperated customers out there (I'm sounding more and more like Victor or Victoria Meldrew here - but Santander's behaviour makes me repeatedly think "I can't believe it!").

Don_Tobio

Thanks japonicaf.

I opened a Direct ISA (issue 2) in Feb 2009, and have just received my annual statement which gave me a rather pathetic £68 on a balance of over £6k!

What am I to do?

Should I request the information on the account and/or enquire into the switch to a Direct ISA (issue 3), so many of you seem to have been opting for.

Do you think this is the way to go; like elektra?

Baldur

Don_Tobio wrote: »

....the switch to a Direct ISA (issue 3)

Issue 6 is the currently available version of the Direct ISA - http://www.santander-products.co.uk/savings/direct-isa/more.html

cosyc

Don_Tobio wrote: »

Thanks japonicaf.

I opened a Direct ISA (issue 2) in Feb 2009, and have just received my annual statement which gave me a rather pathetic £68 on a balance of over £6k!

What am I to do?

Should I request the information on the account and/or enquire into the switch to a Direct ISA (issue 3), so many of you seem to have been opting for.

Do you think this is the way to go; like elektra?

I'm in exactly the same positon as you, and think it's disgraceful they just drop the rate then start up another isa with a different issue number. As far as I can see i've never received anything from them so how are you supposed to know. Check the website every day??

So i'm going to transfer to nationwide. As long as it similar rates and I can view online - Adios to santander.

nickeloi

As with others it seems I've had a nightmare. I thought after the hassle of signing up in the first year it was all running smoothly.

That was until I got my statement this week - an amazing £15 interest on over £5,000 of savings - that's shockingly bad!!! I'm so angry that I will take my business elsewhere unless they sort it out this week. No reply to my complaint yet though, so I expect to have fun shouting some loud words in a branch this weekend...

Knowing my promotional rate would change in April 2009, I shopped around for better deals, but only saw around 3% on offer for normal cash ISAs elsewhere, so I stayed with Abbey because I believed the assistant in the branch who said I was still getting 2.5% on my ISA (which according to my statement is Direct number 2 - opened around April 2008 if that seems consistent).

Kept my eye out for better deals over the coming months but as it became apparent Bank of England interest rates wouldn't rise and the offers elsewhere began to lower, I started to think 2.5% would do for the time being. I wouldn't expect it to drop, after all Bank of England rates were at their lowest ever values, and Abbey were offering 2.5% so why should that go lower?

I tried checking on my interest progress throughout the year but was told they only apply it at the end of the year and no-one could get me any figures. Some quick estimations by the staff member on hand seemed reasonable (more like £15 per month) so no worries I have had until now.

Good luck to all you others trying to save - mine will disappear very soon into a black hole of a wedding fund and I need that missing £100 or so!