Secure Trust Bank 183 Day Tracker Account

Thrugelmir

buffman wrote: »

I do not currently intend to close my account as this will make it impossible for the Financial Ombudsman, if it rules in my favour, to reinstate the rate guarantee indefinitely going forward.

The T&C's are very explicit and legally enforcable. So the FOS has no grounds to uphold your complaint. As has to defer to the law.

The required notice period has been given.

No one could envisage BOE base rate remaining low for so long. Something which seems to be overlooked. We are all paying the cost of the false economic boom which lasted until 2008.

buffman

Dump_Tesco wrote: »

Please keep up the pressure and keep in touch.
:mad:

It is certainly my intention not to let this drop. It was promoted as a notice account that will pay 3% above base rates. All the literature and screen shots taken at the time are very clear. Indeed it was impossible to get to the link to apply for an account without viewing these 'benefits'. It was confirmed to me on the phone that the account will track 3% above base rates for as long as the account is opened. I think we have a very good case.

Initally anyone who wants to pursue this needs to lodge a complaint with Secure Trust Bank. This can be done by phone. If this fails, it needs to be passed to the Financial Ombudsman. I have spoken to them informally on the phone and was told that we could well have a case. The more people who complain the better.

I do not plan to close my account as their legal obligations to me will cease from that date and there will be no way for the Financial Ombudsman to reinstate the rate guarantee. Anyway 2.11% is not bad for a 6 month notice (which I will probably give in a few months time).

VT82

Thrugelmir wrote: »

No one could envisage BOE base rate remaining low for so long. Something which seems to be overlooked. We are all paying the cost of the false economic boom which lasted until 2008.

This product was written at a time when BBR had been 0.5% for years, and all banks had been told to get their house in order in terms of Asset Liability management, and not writing stupid products with free options for the customer. Secure Trust obviously failed miserably in this.

Secure Trust aren't reducing the rate because BBR has been 0.5% for so long, they're doing it because the market cost of funds has reduced (thanks to FLS), a risk that they should have been prepared for, and a risk which, now it's crystallised, they think they can now penalise the customer for.

Imagine a bank offered 5% fixed for five years a couple of years ago, hedging it with a swap on which they received 2% and paid BBR. But they did it with their eyes open thinking that 3% was a fair margin to pay at the time for long term funding. If they were to try to reduce the rate by 1.39%, would you consider that to be fair game? What Secure Trust is doing is no different, except they allowed their risk to extend indefinitely into the future, and aren't even giving the customer five years of benefit.

atypical

buffman wrote: »

I do not plan to close my account as their legal obligations to me will cease from that date and there will be no way for the Financial Ombudsman to reinstate the rate guarantee.

I'm not sure the Ombudsman can (or would want to) force the indefinite rate guarantee to be reinstated as it's effectively forcing the bank to take on risk.

I think a compensation payment is more likely but not sure how they'd calculate it.

Thrugelmir

atypical wrote: »

I'm not sure the Ombudsman can (or would want to) force the indefinite rate guarantee to be reinstated as it's effectively forcing the bank to take on risk.

Not risk. Banks use deposits to lend. If the lender isn't able to make sufficient margin to pay the depositor interest and cover the banks operating costs etc. Then the bank makes a loss. Hence the regulators would be seen to be inferring in a commercial manner.

atypical

Thrugelmir wrote: »

If the lender isn't able to make sufficient margin to pay the depositor interest and cover the banks operating costs etc. Then the bank makes a loss.

This is a form of risk? A risk which would decrease as the % above base rate decreases.

VT82

Thrugelmir wrote: »

Not risk. Banks use deposits to lend. If the lender isn't able to make sufficient margin to pay the depositor interest and cover the banks operating costs etc. Then the bank makes a loss. Hence the regulators would be seen to be inferring in a commercial manner.

It is a risk. Basis risk, interest rate risk, the risk of not adequately assessing the long term cost of funds when pricing products (part of maturity mismatch risk) - they all ultimately come down to the risk of not making enough interest margin. And they are therefore all risks the PRA would rather not force onto a bank.

However, the FCA is another story, and I'm fairly sure they were explicitly set up to interfere in commercial decisions!

VT82

atypical wrote: »

This is a form of risk? A risk which would decrease as the % above base rate decreases.

Actually, I think a lot of banks are expecting the cost of funds margin, expressed as a margin above BBR, to actually reduce as Bank rate rises. In which case this product would become an even worse problem for Secure trust (if they were to honour it!).

buffman

I received my complaint acknowledgmet letter last week. Unsurprisingly they have received a number of similar complaints!

Careful_ly

I have this account too. I have a screen shot showing 3% above base rate.


I rang and raised a complaint with them and was told that the decision to reduce the rate is final.


I have spoken to financial ombudsman service today and they say that it is no longer necessary to wait 8 weeks, they are sending me a form and I need to send a copy of my screen shot with the letter from Secure Trust (which I haven't had yet)