Possibly the real reason why Tesco are ending the direct debit facility into their savings accounts

[Deleted User]

There has been a lot of speculation lately as to the real reason why Tesco Bank are ending the facility of direct debit payment into their savings accounts. It has been suggested that the facility has been abused by people setting up £1 direct debits to meet the requirements for interest or reward payments on various current accounts.

Over the last 2 or 3 months I have started to receive monthly statements on my Tesco Bank internet savings accounts. Previously the statements were sent once a year. I understand that there has been a recent change in the regulatory requirements and monthly statements are now required to be issued in respect of savings accounts where there have been transactions (in or out) on the account in the previous month.

Although many (most?) account holders are "paper-free", there will be a substantial minority of customers (including myself) who have opted to receive paper statements. The cost of producing monthly statements, and posting them out to customers, where a savings account is being used only to receive a few incoming and outgoing £1 payments in a month could have persuaded Tesco to end the facility.

It's ironic that a regulatory change designed to be for the benefit of the customer could possibly have caused the demise of a useful facility to many.

YorkshireBoy

Been on my mind too.

But they could have very easily sorted the 3 Ps (paper, printing, and postage) issue by serving 60 days notice that they were moving to online only*, rather than encouraging their customers to close their old (now bonus exempt) IS and IASA accounts by removing the DD facility.

The fact they didn't do that, and chose the path they did, just shows they were fed up of the abuse and wanted rid of those customers.

I do wonder though, if the DDs had been for, say, £10 each, and customers didn't send the funds back the same day, but once a year, whether they would have made the move they have?


* I'm surprised they didn't launch the IS years ago as an online only account. I can understand the IASA being paper, because that had a card and the account could be transacted upon in store, but not the IS?

A_T

It all comes down the the same thing Tesco don't want their currents accounts used as a savings account.

Sea_Shell

I think that Banks etc. need to be very savvy these days when setting their T&C's as they must know that any little "loophole" or "advantage" will be found initially by some customers, and due to forums such as these, become widely known and "exploited" en masse.

They need to think through these possibilities BEFORE launching accounts, if they don't want to be used and abused, in a way they didn't intend.

It was good whilst it lasted. RIP Tesco DD's

aj23_2

Not another thread about this! Can't people keep it to one thread instead of keeping on creating threads on the same thing.

I get why people are doing it (I wish I had that much time), but Tesco isn't there to facilitate you setting up Christ knows how many direct debits for £1 each just to keep your perks with current accounts with other banking providers. It is a waste of their time and resources to administrate those countless accounts. As a result, those who are genuinely using this account as a savings account are now being affected by those who are kinda abusing the system (again, i do get why people were doing it) and that is usually what happens. The few are affecting the many.

chiefnoodle

well I had my DDs going into ISAs for the kids which can't be withdrawn until they're 18. Its true the DDs were only for a pound each, but it added up pretty quick and tesco will now be losing a fairly big pot. As now they have stopped DDs, I will transfer the ISA to another provider; had the DDs continued, the entire amount would've remained with them so that the DDs would keep going.

So they could've/should've left the DD facility for accounts where the money is tied up (and online only as per previous comment)

aj23_2

A_T wrote: »

It all comes down the the same thing Tesco don't want their currents accounts used as a savings account.

No, because you've never been able to place direct debits from your Tesco current account to your Tesco savings account.

They have a problem with people who have current accounts with other providers who are suing a Tesco savings account which accepts inward direct debits to keep their perks with the other providers like monthly interest enabling them to meet their requirements. I get why people are doing it, but I also get why Tesco is halting it. It's a waste of time and resources.

fun4everyone

YorkshireBoy wrote: »

I do wonder though, if the DDs had been for, say, £10 each, and customers didn't send the funds back the same day, but once a year, whether they would have made the move they have?

I completely agree and people doing £1 dd's were being ignorant blockheads. If that hadn't been going on it might have lasted longer.

That said, if it is possible to take the p iss then humans always will and imo it would have been pulled eventually anyway.

aj23_2

chiefnoodle wrote: »

well I had my DDs going into ISAs for the kids which can't be withdrawn until they're 18. Its true the DDs were only for a pound each, but it added up pretty quick and tesco will now be losing a fairly big pot. As now they have stopped DDs, I will transfer the ISA to another provider; had the DDs continued, the entire amount would've remained with them so that the DDs would keep going.

So they could've/should've left the DD facility for accounts where the money is tied up (and online only as per previous comment)

If everyone is doing it for a pound per direct debit, they are most likely transferring it back out that month too, so in reality people aren't actually holding much with them at all. They don't want the hassle of administrating customers who are putting in £2 or £3 a month with a balance of about £20. It's wasting their resources and affecting genuine customers.

[Deleted User]

aj23 wrote: »

Not another thread about this! Can't people keep it to one thread instead of keeping on creating threads on the same thing.

I get why people are doing it (I wish I had that much time), but Tesco isn't there to facilitate you setting up Christ knows how many direct debits for £1 each just to keep your perks with current accounts with other banking providers. It is a waste of their time and resources to administrate those countless accounts. As a result, those who are genuinely using this account as a savings account are now being affected by those who are kinda abusing the system (again, i do get why people were doing it) and that is usually what happens. The few are affecting the many.

If someone is genuinely using the Tesco Internet Saver as a savings account, they are unaffected by the change except that (if they are making deposits by direct debit) they will have to change to standing order or another method of deposit.

aj23_2

fun4everyone wrote: »

I completely agree and people doing £1 dd's were being ignorant blockheads. If that hadn't been going on it might have lasted longer.

That said, if it is possible to take the p iss then humans always will and imo it would have been pulled eventually anyway.

Completely agree with you and YorkshireBoy.