FORD money fixed rate savings - means you cant close the account unless you die? Really?

We4

Son invested money with Ford last year on a one year fixed term.  Great.

Product matured in February this year.  Son (not hugely financially savvy – at uni – in lockdown)  didn’t really take notice of email sent to him with options of what happens at maturity.

Official letter from Ford received at home.  Not opened by parents until son comes home from uni at the end of March.

Parents and son read letter which sets out options at product maturity, one option being that funds are automatically moved into a default product (in most circumstances same as maturing product) if he did not select an option.

Son didn’t select an option so funds automatically moved into another 1 year fixed rate (at .7% so not bad!)

BUT, son, having recently come of age (21?!) has come into money invested by grandparents (all sadly passed now) and would like to combine all savings, and (guided by parents) decides he would like to invest in an ISA.

Son asks to withdraw money from Ford and close account.

Noted in official letter from Ford was the wording  that “once on default product, you’ll have 14 days to change your mind but be aware that any withdrawals made outside of the 14 days may incur a breakage charge”. 

Implying that withdrawals can in fact be made, but with a possible charge. Fine, we can live with that.

Son emails Ford.

Ford: No, cant access money. In fixed rate account.

Son: Letter says I can, albeit will incur a breakage charge, according to your letter?

Ford: Maturity letter you received is a generic letter – does not apply to our Fixed Saver accounts – can understand how this can be confusing.

Ford: No withdrawals permitted from the account for the term, unless Early Closure Request is submitted due to change of circumstances.

Son: asks how he can close account (and get access to HIS OWN money!)

Ford: generously offer that if he dies, then account can be closed.

Is this right?  Okay, son should have been on it. But, surely, its his money, why cant he get hold of it? 

And letter surely is misleading – on the one hand saying that funds can be withdrawn (with breakage charge) and on the other saying, sorry – misleading but doesn’t apply!  Surely contradicts something?

We would really appreciate any advice!

sparklep0ny

We4 said:

Son invested money with Ford last year on a one year fixed term.  Great.

Product matured in February this year.  Son (not hugely financially savvy – at uni – in lockdown)  didn’t really take notice of email sent to him with options of what happens at maturity.

Official letter from Ford received at home.  Not opened by parents until son comes home from uni at the end of March.

Parents and son read letter which sets out options at product maturity, one option being that funds are automatically moved into a default product (in most circumstances same as maturing product) if he did not select an option.

Son didn’t select an option so funds automatically moved into another 1 year fixed rate (at .7% so not bad!)

BUT, son, having recently come of age (21?!) has come into money invested by grandparents (all sadly passed now) and would like to combine all savings, and (guided by parents) decides he would like to invest in an ISA.

Son asks to withdraw money from Ford and close account.

Noted in official letter from Ford was the wording  that “once on default product, you’ll have 14 days to change your mind but be aware that any withdrawals made outside of the 14 days may incur a breakage charge”. 

Implying that withdrawals can in fact be made, but with a possible charge. Fine, we can live with that.

Son emails Ford.

Ford: No, cant access money. In fixed rate account.

Son: Letter says I can, albeit will incur a breakage charge, according to your letter?

Ford: Maturity letter you received is a generic letter – does not apply to our Fixed Saver accounts – can understand how this can be confusing.

Ford: No withdrawals permitted from the account for the term, unless Early Closure Request is submitted due to change of circumstances.

Son: asks how he can close account (and get access to HIS OWN money!)

Ford: generously offer that if he dies, then account can be closed.

Is this right?  Okay, son should have been on it. But, surely, its his money, why cant he get hold of it? 

And letter surely is misleading – on the one hand saying that funds can be withdrawn (with breakage charge) and on the other saying, sorry – misleading but doesn’t apply!  Surely contradicts something?

We would really appreciate any advice!

It doesn't say that funds can be withdrawn with a breakage charge, it just says that if a withdrawal were to be made, it may incur a charge.  In this case that's moot as withdrawals can not be made.

xylophone

If the boot had been on the other foot and Ford had told him that they wanted to change the terms of the fixed rate deal, perhaps to a shorter term or a lower rate.....?

He needs to learn that a contract must be honoured and that it is necessary to be on the ball with his financial arrangements?

He can always invest Grandpa's generous bequest  in an ISA now and add his  maturing funds next February - it's even the same tax year!

HappyHarry

We4 said:

But, surely, its his money, why cant he get hold of it? 

Because it is in a one year fixed rate term account. There is not much point in Ford, or anyone else, offering fixed term accounts, if the customer can take the money out at any time.

colsten

Hard to see why Ford Money should waive the T&Cs your son agreed to, and instead agree to your son's unwritten T&Cs.

We4

Ok, four comments in and we are getting similar messages!  Really appreciate the sanity check and it will be a life lesson!
Thanks very much to all who have responded.

Zanderman

We4 said:
Okay, son should have been on it. 

Yes, son should have been on it.
He opened a fixed term account, ignored the correspondence sent at the end of the fixed term, product defaulted into another fixed term. And now, too late, he wants out of the fixed term.
Fixed term means what it says.  Fixed term.
As xylophone say above he'd be pretty miffed if Ford told him partway through a fixed term that they wanted out of the deal.
He can't expect them to bend the rules just because he doesn't like them.
The reference about a charge for early withdrawal will probably not apply to this particular fixed term account. 
Lesson is never, ever, ignore letters from a bank, and always put an alert on your calendar - very easy to do - to remind you when a fixed term account matures. 
And anyway 0.7% isn't too shabby!!

dcs34

In my experience Ford fixed term savers don't allow for withdrawals (other than perhaps interest if it is paid monthly). At the end of the year, the product will mature again, at that point your son will have a period of time to access the money, move it into an accessible account (if Ford are offering them), or have it reinvested into another fixed account (if Ford are offering them).

You're misunderstanding this bit:

"Ford: No withdrawals permitted from the account for the term, unless Early Closure Request is submitted due to change of circumstances."

As far as Ford are concerned, he had consented to having his money reinvested into a fixed 1 year account. The only thing that would override this is a change in circumstances, such as diagnosis of a terminal illness, death, etc.

Once the term is up, of course he can access the money - providing he actually reads and acts in correspondence. In the meantime, given the rate of 0.7% perhaps it's better left where it is!

Grumpy_chap

We4 said:

Son invested money with Ford last year on a one year fixed term.  Great.

Product matured in February this year.  

funds automatically moved into another 1 year fixed rate (at .7% so not bad!)

BUT, son, having recently come of age (21?!) has come into money invested by grandparents (all sadly passed now) and would like to combine all savings, and (guided by parents) decides he would like to invest in an ISA.

Son asks to withdraw money from Ford and close account.

Ford: generously offer that if he dies, then account can be closed.

It seems as though the funds are in a fixed term account that will mature in February 2022.
At that point the funds can be drawn and moved to the ISA or whatever else is chosen - that is not a disaster as it can still be done within this tax year and join the inheritance funds (which should not need to wait to go into the ISA).
The alternative access to the funds permitted in the T's&C's is rather drastic and would make everything moot as far as your son is concerned.
Out of interest, what is the rate that will be got from the ISA and does that better the Ford rate, even when tax is considered?

eskbanker

We4 said:

FORD money fixed rate savings - means you cant close the account unless you die? Really?

No, these accounts can be closed at maturity - hopefully your son will still be alive in less than a year's time....

jimjames

I can understand the frustration in that the default option is another fixed account, I would expect default to be an instant access at a pittance so he's actually done quite well from it.