Charter Savings - Reducing Interest with Immediate effect

darren72

Just had an e-mail notification that the interest rate on my 120 day notice account is reducing with immediate effect - I thought they had to give notice ?

Here is the e-mail:

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The interest rate on your Notice account is reducing.

Following the Bank of England's decision to reduce the Bank Base Rate by 0.25%, we've carefully reviewed our savings accounts and have taken the difficult decision to reduce the interest rates payable on our Notice accounts by the same amount.

The change affects Notice accounts only - if you hold any Fixed Rate Bonds or Easy Access accounts these will not be changing.

When are the rates changing?

The new rates are effective from 22 August 2016, and we expect them to remain competitive in the market place.

You can find the rates we pay (and previous rates paid) on all of our variable rate accounts in our Interest Rate Summary document on our website.

http://pdf.chartersavingsbank.co.uk/01502_savings_interest_summary.pdf

You don't need to do anything.

The change to your interest rate will happen automatically - nothing else on your account will change.

Need help?

If you've got any general queries regarding your account, please visit the Frequently Asked Questions page on our website. Or, if you prefer, call us on 0800 032 9999. We're open from 8am to 8pm Monday to Thursday, 8am to 6:30pm on Fridays, 9am to 5pm on Saturdays and 10am to 4pm on Sundays.

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[Deleted User]

I've just had the same email for my 30 day notice account and was surprised of the lack of a notice period.

The General Savings Conditions provided when I opened the account state they don't have to give the usual 14 days notice "where a variable rate account tracks a publicly available reference rate, such as the Bank of England Base Rate or other publicly available reference rate."

My account is variable but does not track the BoE base rate therefore surely they need to give 14 days notice.

darren72

My thoughts exactly - and no option to take money out without notice which other banks seem to be doing because of the rate change (unless it is because some others are reducing the rate by more than the 0.25%).

bowlhead99

[Deleted User] wrote:

The General Savings Conditions provided when I opened the account state they don't have to give the usual 14 days notice "where a variable rate account tracks a publicly available reference rate, such as the Bank of England Base Rate or other publicly available reference rate."

My account is variable but does not track the BoE base rate therefore surely they need to give 14 days notice.

Your account may not formally be a "tracker", but you can clearly see that the national base rate just fell by a quarter percent and your account rate tracked it downwards by the same quarter percent.

So, for such a change, when your account rate is only being varied by the exact same amount as the central bank's rate and no further - it doesn't sound like you need or are entitled to a lot of notice to prepare for it. You got as much notice from them, as they got from the central bank, that the rate was definitely dropping by 0.25%.

charlieboycat

[Deleted User] wrote:

The General Savings Conditions provided when I opened the account state they don't have to give the usual 14 days notice "where a variable rate account tracks a publicly available reference rate, such as the Bank of England Base Rate or other publicly available reference rate."

That isn't what they say now. Para 20.5 says "If we rely on paragraph 20.2 to change our interest rates or tiers, we’ll give you at least 14 days’ advance notice of any decrease to your interest rate that is material (except for variable rate accounts that track a publicly available reference rate, such as the Bank of England Base Rate) and if it is not material we’ll give you notice at the earliest opportunity after the change has been made. We will determine what is material in line with industry practice and having regard to the size of the balance of your Account and the size of the change in the interest rate. For more information, a copy of the Industry Guidance for FCA Banking Conduct of Business Sourcebook is available from the British Bankers’ Association website at bba.org.uk."

That guidance says:

A material change
To achieve a proportionate approach, firms should consider a change to be material when:
 The interest rate of the account falls in a single movement by more than 25 bps; and
 the account has a balance of £500 or more (this is a point in time balance e.g. at the time the decision is taken to change the interest rate)
Or;
 A single interest rate fall of 25bps or less will result in there having been a cumulative downward movement of the account’s interest rate over the preceding 12 months (the ‘reference period’) of 50bps or more; and
 the account has a balance of £500 or more (this is a point in time balance e.g. at the time the decision is taken to change the interest rate, which results in the cumulative movement of 50bps or more)
An interest rate change will be notified on accounts with more than one interest rate tier, if the interest rate change on any one tier is material.

Since none of their accounts appear to have had any previous rate decrease, a drop now of 0.25% is not "material".

[Deleted User]

charlieboycat wrote: »

Since none of their accounts appear to have had any previous rate decrease, a drop now of 0.25% is not "material".

But a drop of 0.26% would have been!

charlieboycat

[Deleted User] wrote:

But a drop of 0.26% would have been!

In the context of that definition, yes. But the point would apply whatever the cut-off (eg. 0.1% v 0.11%). However, to my mind whether or not a cut of 0.25% is or is not "material" should have some reference to the starting point rather than just to the absolute income reduction in £s. It seems to me that a cut from eg. 0.5% to 0.25% (a 50% reduction in income) should be regarded as more material than a cut from eg. 5% to 4.75% (a 5% reduction in income).

Lulu58

I've got the same problem on a 95 day notice account and have just been on the phone to the bank. Their staff were told at 9.00 and the emails started going out at 9.30.

They are very pleasant and helpful, but are quoting the T&C's mentioned above. I've raised a complaint. Not sure it will do any good, but nothing ventured etc.

charlieboycat

Lulu58 wrote: »

I've raised a complaint.

.... that they're doing things in accordance with the T&Cs...?

mjmal51

I too was surprised at the immediate reduction but as the new rate for my 95 day notice is 1.49% it is still better than my other accounts so the money will stay there.

Lulu58

No, my complaint is about:
- my Key Facts document does not state that my account is tracking anything, be it BoE, Libor etc. which is their argument for reducing the rate
- the points in the T&C's raised by charlieboycat above
- the lack of notice given for a 95 day account when I cannot withdraw my funds
- I spoke with the bank before I opened the account and they assured me they gave notice of reducing interest rates in line with the notice on customer accounts

I have had several notice accounts over the years and I can't think of one bank that has not given customers the equivalent notice period of their account before dropping the rates.