Problem with a fixed rate deposit savings account

noh

stormy-weathers wrote: »

I would rather not give the bank name.I'm not sure how far this matter is going to go so would prefer to avoid naming them at this stage.No there is only one account so interest has not been paid to another account each year.

It would help if you would name the bank and account then someone can find the T+Cs and interest rates for that account and check the calculation.

Did the account holder get a statement each year? What do these say?

PeacefulWaters

stormy-weathers wrote: »

I would rather not give the bank name.I'm not sure how far this matter is going to go so would prefer to avoid naming them at this stage.No there is only one account so interest has not been paid to another account each year.
The name of the account is 'Three year fixed rate deposit'

Well as you're making this as easy as knitting fog I suggest you complain, then take it to the FOS if still not happy.

Struggling to help while it's a guessing game.

stormy-weathers

PeacefulWaters wrote: »

Well as you're making this as easy as knitting fog I suggest you complain, then take it to the FOS if still not happy.

Struggling to help while it's a guessing game.

Not sure why you say that.I've given all the information which is why members have calculated and came to the same amount we have.Maybe you could let me know what information i haven't provided.

stormy-weathers

noh wrote: »

It would help if you would name the bank and account then someone can find the T+Cs and interest rates for that account and check the calculation.

Did the account holder get a statement each year? What do these say?

I've given you all the terms and conditions on the account.I have it in front of me and have taken all the information for them.You will simply just find the information i have given you.I've explained why i don't want to name the bank.It also looks like there is going to be an investigation into their conduct so i'm just being extra careful about naming who they are because of all this.No they did not send a statement each year they explained that as it was a fixed rate account they didn't operate that way.We did request one.
My own view is that they have applied simple and not compound interest.We have asked them this but they have yet to respond

alanq

The discrepancy is far more than can be explained by not compounding interest.

I reckon that the rate paid is equivalent to 1.83% gross compounded.

noh

stormy-weathers wrote: »

I've given you all the terms and conditions on the account.I have it in front of me and have taken all the information for them.You will simply just find the information i have given you.I've explained why i don't want to name the bank.No they did not send a statement each year they explained that as it was a fixed rate account they didn't operate that way.We did request one.
My own view is that they have applied simple and not compound interest.We have asked them this but they have yet to respond

I have never had an account where annual statements were not sent. How would the account holder know how much interest had been earned should they need to declare it for tax?
The interest received is less than "simple interest" at 4.25% over three years. It is more like 18 months at 4.25% with tax deducted.

Either the bank has made a huge mistake or you have got your facts wrong.

ffacoffipawb

stormy-weathers wrote: »

My own view is that they have applied simple and not compound interest.We have asked them this but they have yet to respond

Simple interest would be
£18,508.38 * 4.25% * 3 = £2,359.82 interest giving a total of £ 20,868.20

Even if the interest was taxed at 20% you should still have £18,508.38 * 4.25% * 3 * 0.8 = £1,887.85 interest giving a total of £ 20,395.23
You are well short of both these figures.

What was the account and the institution so we can see if it genuinely was a 3 year 4.25% bond?

If the proceeds were £19,543.18 then this is just 1.83% pa for 3 years net or gross as appropriate). We are nowhere near 4.25%. Are you sure about the amount of the initial investment? Have you got the interest added split by account year?

EDIT: I'm not sure you could get a rate as good as 4.25%p.a. for 3 years in 2012?

stormy-weathers

alanq wrote: »

The discrepancy is far more than can be explained by not compounding interest.

I reckon that the rate paid is equivalent to 1.83% gross compounded.

Yes that's correct.I think it might have something to do with compound interest but obviously there must be other factors
as well because the simple interest rate doesn't come to the figure
they have.

stormy-weathers

noh wrote: »

I have never had an account where annual statements were not sent. How would the account holder know how much interest had been earned should they need to declare it for tax?
The interest received is less than "simple interest" at 4.25% over three years. It is more like 18 months at 4.25% with tax deducted.

Either the bank has made a huge mistake or you have got your facts wrong.

I agree.We asked about the annual statements and told then
that we found it very odd.
I know we haven't got our facts wrong so it's a question of their mistake.It's also strange that they won't answer emails or letters about the issue.When we ring them they refuse to even say who we are talking to.I've never come across hs sort of thing before

stormy-weathers

ffacoffipawb wrote: »

Simple interest would be
£18,508.38 * 4.25% * 3 = £2,359.82 interest giving a total of £ 20,868.20

Even if the interest was taxed at 20% you should still have £18,508.38 * 4.25% * 3 * 0.8 = £1,887.85 interest giving a total of £ 20,395.23
You are well short of both these figures.

What was the account and the institution so we can see if it genuinely was a 3 year 4.25% bond?

If the proceeds were £19,543.18 then this is just 1.83% pa for 3 years net or gross as appropriate). We are nowhere near 4.25%. Are you sure about the amount of the initial investment? Have you got the interest added split by account year?

EDIT: I'm not sure you could get a rate as good as 4.25%p.a. for 3 years in 2012?

As explained in previous messages i would rather not give the bank name.I can confirm that it was a genuine three year 4.25%.Yes i'm sure about the amount of the initial investment.
They haven't given us the interest added split by account year.
We have asked.I've tried to get this information from them and they won't respond.The Financial Ombudsman say i need to have received a final response letter before they can look at the complaint.I've explained that they are not answering our letters,emails etc so we can't even get a final response letter.
I'm hoping that because of this they will contact the bank and at least get them to send us the final response letter.I'll be speaking to the Financial Ombudsman again tomorrow.I'm hoping that with them involved the bank will finally respond to all our emails and letters.