Metro Bank Misleading Customers ( maybe breaching advertising standards )

[Deleted User]

ColdIron said:

Well I hope that now you understand it that you realise Metro Bank are not misleading customers as they like all banks and building societies are required to quote AER and that they are not breaching advertising standards as it seems that the Advertising Standards Authority are (at least) one of the bodies that require them to do so

You live and learn

I feel Metro still needs to differentiate these as two different products where you will end up with less interest if you choose the option to take the interest monthly instead of in one go at the end of the 1 year term.

This needs stating quite clearly during the sign up process with the customer. They are trying to sell it as one single product and I am pretty sure most of the population would think they'd get the same amount of interest either way because of that.

[Deleted User]

BooJewels said:

It is recommended that under FSCS protection, you shouldn't really save more than £85k in one financial institution.  If you were to put £85k in this account and have monthly interest paid away as income - the difference per month between 5.91% (£418.63) and 5.76% (£408) is £10.63 per month.  Not really a lifestyle changing difference and 5.76% is still a decent rate for paid away monthly interest at the moment - I've just signed up for one a bit less than that and am happy with it as it suits my needs.

Thanks again BooJewels. I was aware of this important point ( £85K per customer per bank ( and be aware of subsiduary banks e.g. First Direct is really HSBC ).

I opened joint accounts where possible to maximise investments in the bigger interest paying products.

EthicsGradient

[Deleted User] said:

ColdIron said:

Well I hope that now you understand it that you realise Metro Bank are not misleading customers as they like all banks and building societies are required to quote AER and that they are not breaching advertising standards as it seems that the Advertising Standards Authority are (at least) one of the bodies that require them to do so

You live and learn

I feel Metro still needs to differentiate these as two different products where you will end up with less interest if you choose the option to take the interest monthly instead of in one go at the end of the 1 year term.

This needs stating quite clearly during the sign up process with the customer. They are trying to sell it as one single product and I am pretty sure most of the population would think they'd get the same amount of interest either way because of that.

Yes, you get less money if you opt to take it earlier. That is inevitable. The AER is the equivalent - this allows you to compare the products. To end up with, after a year, the exact same amount of money as the "pay on maturity" version, you'd need to save the monthly interest in an account with the same AER.

People won't think they'll get the same amount of money without putting it back in an accoutn with the same AER, because the gross interest quoted is different. This is industry standard in the UK for some years now.

[Deleted User]

EthicsGradient said:

[Deleted User] said:

ColdIron said:

Well I hope that now you understand it that you realise Metro Bank are not misleading customers as they like all banks and building societies are required to quote AER and that they are not breaching advertising standards as it seems that the Advertising Standards Authority are (at least) one of the bodies that require them to do so

You live and learn

I feel Metro still needs to differentiate these as two different products where you will end up with less interest if you choose the option to take the interest monthly instead of in one go at the end of the 1 year term.

This needs stating quite clearly during the sign up process with the customer. They are trying to sell it as one single product and I am pretty sure most of the population would think they'd get the same amount of interest either way because of that.

Yes, you get less money if you opt to take it earlier. That is inevitable. The AER is the equivalent - this allows you to compare the products. To end up with, after a year, the exact same amount of money as the "pay on maturity" version, you'd need to save the monthly interest in an account with the same AER.

People won't think they'll get the same amount of money without putting it back in an accoutn with the same AER, because the gross interest quoted is different. This is industry standard in the UK for some years now.

What you say is true EthicsGradient but in your language/post, the way you phrased it, I believe less than half the population will get the point.

It needs to be said like I said it i.e.

Metroman "YOU GET LESS INTEREST MONTHLY THAN IF YOU WAIT FOR THE YEARLY INTEREST"

Customer "Why ? The flyer says the AER is the same for each version ?"

Metroman <then explains all the technical garbage you did>

[Deleted User]

ColdIron said:

Just to add that Metro bank are still achieving (a) and as they are currently the top monthly interest paying account going you couldn't have done better elsewhere

 I did my research ! It was top on this website too. Opening joint accounts is complete hassle though because they won't do it online ( only in branch ) and our nearest branch was over an hours drive away. And we had to go three times... and I had to pay £6.40 parking twice ... and a seagull mugged me for a cinnamon doughnut ( not kidding! )

EthicsGradient

[Deleted User] said:

EthicsGradient said:

[Deleted User] said:

ColdIron said:

Well I hope that now you understand it that you realise Metro Bank are not misleading customers as they like all banks and building societies are required to quote AER and that they are not breaching advertising standards as it seems that the Advertising Standards Authority are (at least) one of the bodies that require them to do so

You live and learn

I feel Metro still needs to differentiate these as two different products where you will end up with less interest if you choose the option to take the interest monthly instead of in one go at the end of the 1 year term.

This needs stating quite clearly during the sign up process with the customer. They are trying to sell it as one single product and I am pretty sure most of the population would think they'd get the same amount of interest either way because of that.

Yes, you get less money if you opt to take it earlier. That is inevitable. The AER is the equivalent - this allows you to compare the products. To end up with, after a year, the exact same amount of money as the "pay on maturity" version, you'd need to save the monthly interest in an account with the same AER.

People won't think they'll get the same amount of money without putting it back in an accoutn with the same AER, because the gross interest quoted is different. This is industry standard in the UK for some years now.

What you say is true EthicsGradient but in your language/post, the way you phrased it, I believe less than half the population will get the point.

It needs to be said like I said it i.e.

Metroman "YOU GET LESS INTEREST MONTHLY THAN IF YOU WAIT FOR THE YEARLY INTEREST"

Customer "Why ? The flyer says the AER is the same for each version ?"

Metroman <then explains all the technical garbage you did>

Metroman: "AER stands for Annual Equivalent Rate. It's the interest rate that you would get if you don't want to withdraw anything until the end of the year. Now, would you like to keep it all in there for the whole year, or would you like to get the interest as money to use each month?"

This is, as we'd said, what every single bank is dealing with. You may not have contemplated saving before, but it's what they all do. That's why, as you said in the OP,

" if you put 5.76 gross into a 12 monthly calculator for 1 year then the  AER does indeed come out at 5.91 AER. "

There's a reason that a "12 monthly calculator" exists, and gives the same figures as Metro - because all savings accounts are like this.

[Deleted User]

I give up - you are too clued up in what you know, that you can't appreciate the problem of Mr. Joe Everyman on the street walking into a bank and comparing AERs on what is being marketed as 1 account ( but with two ways of payout - either monthly INTO A DIFFERENT ACCOUNT i.e. "it's a pay away" account or wait a whole year for the payout ). Both those ways of payout have the same AER written against them on the bank's flyer so Mr. Joe Everyman is in all likelihood going to assume he'll get the same interest either way.

It's no use condescending to him and just saying "Yes the AER calculator does say the same rate - that's the way the calculation works." He needs to be told, in no uncertain terms, he will get less total interest at the end of the year ( i.e. the gross rate NOT the compounded AER rate ) if he takes the pay me monthly option, because the monthly interest is not put in the saving account to be compounded.

You understand this because you are clued up. Mr. Average only understands "compare AER rates" and the two versions of the account have the same AER to he'll think he gets the same total interest either way.

And that is why Metroman has to start with "YOU GET LESS INTEREST MONTHLY THAN IF YOU WAIT FOR THE YEARLY INTEREST"

EthicsGradient

And that's why there's a "gross rate", which is lower for the monthly interest version (and which is quoted before the AER is). People understand that a lower interest rate means less money.

[Deleted User]

Again you are making a big assumption about Joe Everyman because you are educated in all this.

Again, I say Metroman has to start with "YOU GET LESS INTEREST MONTHLY THAN IF YOU WAIT FOR THE YEARLY INTEREST"

MetroMan would then continue by using the GROSS rate to explain to the customer he will only get that rate each month if he takes monthly interest because it can't be compounded. Whereas if the customer waits the whole year he'll get the AER rate.

You are assuming everyday folk know about all sorts of bank jargon and calculations such as GROSS interest - they don't !
Most people don't know how to work out percentages either e.g. If my account went up by 17.4% on the figure of last month and it's now £834 what was it last month ? = Blank stare from the majority of the population.
The majority of people when talking about savings only know the dictat "look for a good AER" ( and they won't be able to explain to you what AER is either ).

We're way off topic now as I'm actually typing what I think Metroman should say to a customer as opposed to what you think he should say to explain this damn account.

My version is accurate, not misleading and not jargon filled. So I prefer mine. I'm sure you like yours better.

EthicsGradient

[Deleted User] said:

Again you are making a big assumption about Joe Everyman because you are educated in all this.

Again, I say Metroman has to start with "YOU GET LESS INTEREST MONTHLY THAN IF YOU WAIT FOR THE YEARLY INTEREST"

MetroMan would then continue by using the GROSS rate to explain to the customer he will only get that rate each month if he takes monthly interest because it can't be compounded. Whereas if the customer waits the whole year he'll get the AER rate.

You are assuming everyday folk know about all sorts of bank jargon and calculations such as GROSS interest - they don't !
Most people don't know how to work out percentages either e.g. If my account went up by 17.4% on the figure of last month and it's now £834 what was it last month ? = Blank stare from the majority of the population.
The majority of people when talking about savings only know the dictat "look for a good AER" ( and they won't be able to explain to you what AER is either ).

We're way off topic now as I'm actually typing what I think Metroman should say to a customer as opposed to what you think he should say to explain this damn account.

My version is accurate, not misleading and not jargon filled. So I prefer mine. I'm sure you like yours better.

Again, I'm pointing out that Metro did start with "you get less interest with the monthly version than the yearly one". If you're not going to use their explanation of the account, which started with the gross rates, there's not much we can do for you.

"Look for a good AER" is fine; these 2 versions are just as good as each other. They have the same AER.