Fixed Rate Saver - are the building society allowed to reduce the interst rate mid year

CarolineP

I have a Fixed Rate Regular Saving account with Coventry Building Society, which I opened about 3 months ago. The AER interest rate was set at 2.5%. They have now emailed me to say that due to the drop in base rate they are reducing the rate to AER 1.85%. I thought the point of having a fixed rate was that the interst rate stayed the same, (like it would for a Fixed Rate Mortgage). Am I wrong about this?

eskbanker

You're right about the principle of fixed rate accounts having, er, fixed rates, but perhaps there's been some confusion, exactly which account do you have?

Edit: the one at https://www.coventrybuildingsociety.co.uk/consumer/savings-accounts/Regular-Saver.html is clearly labelled as being variable rate not fixed....

Bernard_Coleslaw

CarolineP said:

I have a Fixed Rate Regular Saving account with Coventry Building Society, which I opened about 3 months ago. The AER interest rate was set at 2.5%. They have now emailed me to say that due to the drop in base rate they are reducing the rate to AER 1.85%. I thought the point of having a fixed rate was that the interst rate stayed the same, (like it would for a Fixed Rate Mortgage). Am I wrong about this?

Hi there. They’ve never offered a fixed rate Regular Saver, to my knowledge. The one they’ve been offering recently, which you say you opened three months ago, is a variable rate.

So yes, they can vary the rate.

SFindlay

CarolineP said:

I have a Fixed Rate Regular Saving account with Coventry Building Society, which I opened about 3 months ago. The AER interest rate was set at 2.5%. They have now emailed me to say that due to the drop in base rate they are reducing the rate to AER 1.85%. I thought the point of having a fixed rate was that the interst rate stayed the same, (like it would for a Fixed Rate Mortgage). Am I wrong about this?

It has  ever been a fixed rate, the product description and terms and conditions that you agreed to (having declared in application you had read and understood them) clearly states it is a variable rate therefore they are perfectly entitled to alter the rate as long as give you sufficient notification of the change in rate which is what they've done. This shows the importance of reading product documentation when signing up for financial products, thankfully this is just a rate change but could be a lot more serious with other products!! 

Reg_Smeeton

Presumably the “fixed” bit relates to fixed term regular savings account, ie: matures 12 months after opening?

RG2015

Reg_Smeeton said:

Presumably the “fixed” bit relates to fixed term regular savings account, ie: matures 12 months after opening?

I have this account and nowhere is it described as fixed. However, like the OP, I did assume that the rate was fixed as regular savers often are and only realised it was variable when reading this forum a few months back.

It is a lesson to all of us to read the account summary information where it is clearly described as a variable rate.