Leek United Regular Savings Account - interest rate dropped

Special_Saver2

Whilst updating my Regular Savings thread, I noticed that Leek United Building Society have dropped the interest rate on their Regular Savings account from 3.5% to 2.25% from 1st December 2012. As this is a variable rate account, this will affect existing account holders. I am not an account holder, so I do not know if they have written to their existing account holders to let them know but they should do under the Banking Code given how large the drop in interest rate is.

If you are an existing account holder then you are in a tricky situation as you cannot reduce the amount you are paying in and you are now only earning 1.75% + 0.5% bonus interest. I do not like accounts where the provider can drop the interest rate and force you to keep paying in a large amount per month or lose out on your bonus interest. At least the bonus interest is only 0.5% in this case.

Once the initial deposit has been made, subsequent payments to the account must be of the same value as the initial deposit. Variations in monthly deposit amounts cannot be accepted.

If you opened the account a long time ago and you are paying in £500 per month, you might want to use your penalty-free withdrawal to remove most of your money now (leave the minimum £25 in the account) and then close the account on its anniversary (to keep your bonus interest).

If you opened your account quite recently, you might want to close the account now and forget about the bonus interest (which is only 0.5%) and you will have earned 3% interest up to the end of November.

Of course, if you are happy earning 2.25% then you could just leave things as they are. You can earn more than this though using the accounts in Martin's Savings Page.

SS2

mulronie

Many thanks for this! I certainly have not been sent anything in the post.

I opened this in March so will have £5k in there as of tomorrow morning that will all be coming out.

Only issue is the remaining 2 payments of £500 that I am committed to make in order to get the bonus rate. Annoying that the T&C's seem to prevent me changing the amount to £25.

I will phone them and see what I can do. I know I signed up to the T&C's and caveat emptor and all that, but this rate change is material and I wasn't informed properly so hopefully there's some room for 'negotiation'

Speculator

If you are thinking of withdrawing and paying in £500 per month, it makes sense to make your December payment via FP before withdrawing your money.

Speculator

mulronie wrote: »

Many thanks for this! I certainly have not been sent anything in the post.

I opened this in March so will have £5k in there as of tomorrow morning that will all be coming out.

Only issue is the remaining 2 payments of £500 that I am committed to make in order to get the bonus rate. Annoying that the T&C's seem to prevent me changing the amount to £25.

I will phone them and see what I can do. I know I signed up to the T&C's and caveat emptor and all that, but this rate change is material and I wasn't informed properly so hopefully there's some room for 'negotiation'

Make your remaining payments as late in the month as possible via FP. Check the T&C.

marathon_man_3

I know it is supply & demand etc, but to drop 1.25% in one jump, when base rate remains unchanged, is a pretty huge fall in one go.

Milarky

The State of Practice Investors leaflet concerning 'Interest' makes informative reading:

8 Interest
8.1 We will tell you the interest rate that applies to your account (and when it is paid or credited)
when you open it. This information is also available:
• in our ‘Interest Rates’ leaflet (except fixed rates, which are not shown on the leaflet);
• on our website;
• via our telephone helpline;
• by asking staff at our branch offices and agents; and
• by looking at notices in our branch offices (except fixed rates which are not shown
on notices).
8.2 On our accounts we:
• calculate interest on a sum deposited in cash or by electronic transfer from the day we
receive it.
• calculate interest on a sum deposited by cheque from the second calendar day after
we receive it; and
• calculate interest on a sum withdrawn up to end of business on the day prior to withdrawal.
However, this may vary depending on the type of account. You should check the special
conditions for particular accounts.
8.3 Subject to any special conditions that apply to particular accounts (for example, fixed rate
or tracker accounts), we can change interest rates as set out in Conditions 8.5 to
8.7 below.
8.4 We may change interest rates at any time, if we reasonably believe that the change is
needed, for any of the following reasons (which may relate to circumstances existing at
the time or those that are expected to apply in the near future):
• to reflect changes in the Bank of England base rate or mortgage or interest rates
generally (including the interest rates paid on similar accounts by other providers of
financial services);
• to respond to changes in the law or the decision of a court or ombudsman;
• to meet relevant regulatory requirements;
• to reflect new (or changes to) statements or codes of practice or industry guidance
designed to enhance consumer protection; and
• to reflect changes to our costs, including administration costs and costs of providing
services or facilities.
Any change we make to interest rates will be proportionate to the circumstances
giving rise to the change.
We can also change the rate of interest for any valid reason (other than those mentioned
above) where we believe the change is appropriate.
8.5 Changes may include the introduction or alteration of “bands” under which:
• interest is not paid where the amount in the account is below a certain level; and/or
• different rates apply depending on the amount in the account.
8.6 Where the change is an increase in the interest rate (when we make a change) we will tell
you about it:
• by placing notices in our branches and agencies, on our website and advertisements in the
Stoke-on-Trent Sentinel, Derby Evening Telegraph and Leek Post & Times (weekly); or
• within a reasonable period of the change, by letter, e-mail or other personal notice.
8.7 Where the change is a reduction in the interest rate, of more than 0.25% in a single change
or more than 0.5% over a rolling 12 months, we will give you written notice of the change
within a reasonable period before it comes into effect.
This does not apply to:
• interest rate tiers applicable to balances below the minimum operating balance for the
account (provided we have clearly told you about the minimum balance requirements);
or
• accounts with less than £500 at the time of notification; or
• fixed rate or accounts that track an externally available interest rate, such as the
Bank of England base rate.
If we do reduce the rate of interest:
• you can, within 30 days of our notifying you of the change, switch your account or close
it, without having to give us any period of notice, pay any extra charges or lose any
interest due up to the date of switching/closure; and
• we will tell you this when we give you notice.
You will be bound by a change of interest rate unless you notify us in writing, before the
change is due to come into effect, that you reject it. If you do notify us that you reject the
change then that will be treated as notice by you to close the account. In this case the
account will be closed but you will not have to give any period of notice or pay additional
charges. However, loss of interest will still apply on notice accounts where the notice
period is beyond the date of the rate change.
8.8 The information on our website will be updated within three working days of an interest
rate change.

CLARIFICATION:

Just spoke to someone at Leek and am informed this is related to a new issue of their Regular Saver and existing accounts are unaffected and keep their old rate [Hence not prior notice of changes]

mulronie

Milarky wrote: »

Just spoke to someone at Leek and am informed this is related to a new issue of their Regular Saver and existing accounts are unaffected and keep their old rate [Hence not prior notice of changes]

I got the same message. Obviously need to improve on their communication skills, especially as their website doesn't distinguish between different issues. Interestingly the "Interest Rates" PDF they publish is still showing as effective 02 June 2012 on their website today.

Andystriker

I have three of these accounts which I fund with £500 each every month.

So am I right in saying that until Leek United write to me I can expect the full 3.5% interest on these accounts?

Special_Saver2

Thanks for the posts above. Following that link from mulronie, the interest rate PDF document has now been updated, effective 1st December 2012, showing:

Open Accounts: Regular Savings Account £25+ with bonus 2.25%
Closed Accounts: Regular Savings £25+ with bonus 3.5%

Although it is not very clear, at least you now have something in writing that corroborates what you have been told over the telephone. The website page for the product itself remains unchanged and would give the impression that the variable interest rate has dropped for all account holders - hopefully Leek United will update that too to make it clearer.

SS2

Jembers

I work for Leek United and wanted to clarify the action they have taken.

The 3% plus 0.5% bonus Regular Saver has merely been withdrawn from sale to new investors. Existing account holders will continue to recieve the 3% plus bonus rate. New investors wishing to open a Regular Savings account are offered the 1.75% plus 0.5% bonus product.

Hope that clarifies - regards

mulronie

Hi all,

Just to resurrect this for anyone who holds the product and is coming up to the 12 month anniversary.

Existing account holders are still receiving 3.00% plus a 0.5% bonus if you keep making monthly contributions with no more than 1 withdrawal each year.

I just called them as my anniversary date is approaching and was pleased to have confirmed that unlike most providers, the Leek bonus does not expire after 12 months - so keep making the contributions if you can afford to as 3.5% is pretty much unbeatable!