Secure Trust Bank 183 Day Notice Tracker

dalbum

Secure Trust Bank have just launched a 183 Day Notice Tracker that guarantees to pay 3% above base rates while you hold the account.

Has anyone had any experience with Secure Trust Bank?


At worst it can be regarded as a 6 month bond paying 3.5%. I think that this product is very interesting.

kidmugsy

Are they offering an ISA variant?

SnowMan

I agree it does look like an interesting account. Link to the page on the Secure Trust Bank website is here.

The short term rate is quite good at 3.5%. But the most interesting thing for me is that it pays base rate + 3% and at the same time there is no obvious limit to the duration over which base rate + 3% is paid. So what I am wondering is, what is stopping someone putting in a lump sum in and just leaving it for many years. Base rate + 3% is likely to look an extremely attractive long term rate.

So that leads to the thought what are Secure Trust Bank's options to get out of the commitment to pay base rate + 3%.

I have trawled through the terms and conditions (link to those is at the bottom of the page in the earlier link). They say on the main account page

Should demand exceed expectation, we have the right to withdraw this account

Presumably they couldn't use that to close accounts that had already been opened could they (it looks like they stop further deposits when they close accounts to new applications but I am talking about money already invested) ?

Assuming not, this is what it also says in the terms and conditions and I am not sure if they could try and use this.

11.8 We may, at our discretion, vary: a) our charges, internally managed rates of interest, banking hours,banking practices and similar matters by written notice to you; b) our base interest rate,which will be the rate published from time to time by Secure Trust Bank PLC as its base rate by general notice on our website and c) any of these Terms and Conditions. We will give you at least 2 months prior notice of any change to these Terms and Conditions. If you continue to maintain an Account or Bond with us after such notice you will be taken to have accepted the changes. Please also refer to the additional conditions for specific Terms relating to the different types of Savings Accounts or Bonds.

Again it is not obvious they could use this to say we aren't going to pay base rate + 3% from 2 months in the future, but possibly they could. So that would then over-ride Term and Condition 15.8.

15.8 Interest will be calculated according to the Bank of England Base Rate as published by the Bank of England and subject to 3% above the Bank of England Base Rate.

At the moment that is my best guess at the catch i.e. they can use term 11.8 to get out of their commitment to pay base rate + 3%.

I would have thought that they would have to make it clearer within the main information that they might stop paying base rate + 3%.

Can anyone else see a more obvious and clearer catch? Interested in other people's thoughts.

dalbum

Thanks Snowman.

I phoned them on Friday and they said that if the account is withdrawn, no new deposits are permitted.

They also said that the rate guarantee is for the life that I hold the account.

This rate guarantee appears to be too attractive to be true. Hence my concerns.

I have applied for the account and assume that if they do somehow backtrack on the rate guarantee in the future, they will have to waive the notice period.

SnowMan

My reason for saying I didn't think they would allow further deposits (to already opened accounts) when the account was withdrawn was the list of old accounts at the end of their terms and conditions where this seems to have been what has haappened in the past. So that ties in with your phone call.

I described the rate guarantee earlier as extremely attractive but your description of too good to be true seems to be a better description. Base rate generally exceeds RPI and the current position of RPI exceeding base rate is a very unusual one. In 2007 when base rate was 5.75% were there savings accounts offering 8.75%? No there weren't. Historically base rate + 3% has not been available on savings accounts for most periods.

This account seems to have fallen beneath the radar a bit but that doesn't mean it isn't a good account. The lack of attention is probably because it is a unique account as far as I can tell in terms of the guarantee (all significant base rate guarantees that I can recall have been time limited) and because Secure Trust Bank are not very well known, and because of the uncertainty on how they could change the guarantee.

If they did try to change the guarantee then it would be interesting to see what would happen if an account holder (who had been told that the guarantee was for the life of teh account for example) complained to the Financial Services Ombudsman to say they thought the guarantee was for the life of the account. After all there is nothing on their main web page to suggest that the guarantee isn't for the life of the account and i think they are supposed to show the key features there.

Dalbum I would make sure you keep a screen print of their webpage, keep a copy of the terms and conditions and keep a careful note of your phone call also including time and date and who you spoke to.

If I had a lump sum available at the moment I would definitely put it in this account.

Of course Secure Trust bank is covered by the FSCS so there shouldn't be any major worries there in terms of investor protection if you stick within the FSCS limits.

atypical

I save my student loan. The interest rate is the lower of March's RPI or base rate + 1%. Anything put into the account is effectively locking in a minimum 2% 'profit'. I'll apply on Monday after giving them a call to confirm.

SnowMan wrote: »

Of course Secure Trust bank is covered by the FSCS so there shouldn't be any major worries there in terms of investor protection if you stick within the FSCS limits.

They talk a lot about their stability:

"We adopt a very conservative risk policy. As at 31.12.10 our Loan : Deposit ratio was 60%, or put another way for every £ of lending to our customers we held £1.67 in customer deposits."

"we do not need to borrow to fund ourselves via wholesale money markets"

"As at 31.12.10 Arbuthnot Banking Group's Tier 1 capital stood at 12.7% and our overall capital at 17.9%."

http://www.securetrustbank.com/general/about-us

kidmugsy

My wife once had an account at Newcastle BS that had a collar on the interest rate - 6% pa, if I remember correctly. Once interest rates had been much lower for several years, they wrote to her to say that they could no longer sustain paying that rate and that they were going to close the account and waive the notice period.

tushingham

i really like the look of this account as I have a lump sum to invest and it would avoid the hassle of shopping around for accounts each yr to find a good rate of interest when existing bonuses end. of course i'd have to keep an eye on base rate but the avoidance of hassle may be worth a little bit of interest rate sacrfice in my case.
am interested in all of the input so far and in what others think, particularly about this bank as I know little about it other than its FSA registered and covered by FSCS.

t