Nationwide e-ISA AER error?

tomwise

When I put about £25k into a Nationwide e-ISA May/June 2010 I thought the AER was 2.75% (including a bonus). I now see that its 2.67%. On querying this with Nationwide I received a reply from their Customer Consultant including the following 'Unfortunately our figure of 2.75% was wrong and we have now corrected the AER to the corrrect details of 2.67%. I do apologise for this error.' What do the esteemed Forum members think of this?

Reaper

Useless of them, and potentally you might have a case for compensation but... we are only talking about £20 on £25,000. Not sure I would bother.

KingL

I'm not sure it was wrong.

They launched the account/rate in, what, April/June this year. It is variable rate and they seem to have since* introduced a fixed bonus element which expires at 30 June 2011. If you took out an account right now, you would get a rate around 2.67% on the year (10 months at the headline 2.75% and the remaining 2 months at the reduced (non-bonus) rate. But if you took out an account back in June 2010 you would get the headline 2.75% AER, because you would get the full 12 months at the 'bonus-included' rate (assuming they don't reduce the underlying/core rate, of course.

It'll be (vaguely) interesting to see how they market this over the next few months. Of course, the AER will reduce more and more as each month passes.

I'm not sure what the regulations are on advertising and AER (you take out a variable rate and takes-yer-chances, surely?), but there are plenty of CYA caveats on the website....



* edit: looking back at the paperwork, it seems like it was there all the time. In their booklet "Transferring your existing cash ISA to Nationwide" [P510(14 May 2010)] (sent to me in June), it's buried in there at para 53: "A fixed bonus of 1.00% will be paid until 30 June 2011".

SalsaDanca

KingL wrote: »

I'm not sure it was wrong.

They launched the account/rate in, what, April/June this year. It is variable rate and they seem to have since introduced a fixed bonus element which expires at 30 June 2011. If you took out an account right now, you would get a rate around 2.67% on the year (10 months at the headline 2.75% and the remaining 2 months at the reduced (non-bonus) rate.

You had me worried for a minute, but fortunately KingL is correct. If you look just below the 2.67% in the big blue box on http://www.nationwide.co.uk/savings/cash_isa/eisa/default.htm you will see "(2.75% gross p.a.) variable inc. 1.00% BONUS fixed until 30 June 2011".

Interest on the e-ISA is paid on 31st August. It's not there yet, so I'll be checking my account tomorrow morning.