Metro Bank Misleading Customers ( maybe breaching advertising standards )

groovyclam

It all hinges on the fact you think Joe Average reads ( and I stress READS ) on the account flyer:

monthly interest = 5.76% Gross / 5.91 AER
yearly interest = 5.91% Gross / 5.91% AER

and immediately understands the difference between Gross and AER and the fact that your monthly interest isn't being compounded means you get less interest overall ( even though the AERs are the same ) JUST FROM READING THE FLYER.

You can see that from reading the flyer ( because you are obviously finance savvy ) but I guarantee the majority of the population can't work all that out from 4 different % rates written against 1 account offering.

I say the majority of the population won't be able to work that out just from reading the flyer. Which is why I think  Mertroman needs to say in spoken word: "YOU GET LESS INTEREST MONTHLY THAN IF YOU WAIT FOR THE YEARLY INTEREST"

and then, when the puzzled Joe Average says "...but...but...the AERs are the same ?" MetroMan can then waffle on about Gross rate, "paying away" interest, compounded interest, how AERs are calculated blah, blah, blah,

masonic

I don't think anyone can argue for a system where people must intrinsically know how their new account works without reading even the account flyer or discussing the finer details in branch or on the phone. If someone is that disengaged that they can't be bothered to read basic info about the account they are opening, then they shouldn't be surprised that they don't understand exactly how things work. To be clear, I'm not knocking people who take that approach, but they don't have the right to blame others for their lack of understanding.

To open an account, you must confirm you have read and understand the terms you are to be bound by. You can either do that yourself, pay an adviser to do it for you, get some help from a trusted friend or family member, or wing it and hope for the best. If you choose the last option, you have only yourself to blame if you don't choose wisely.

It shouldn't need to be explicitly said that you get less interest per month if you make withdrawals than if you do not. But if "Metroman" is asked about this then he should be able to tell you that you will earn more interest from the account overall if you do not opt to have the interest withdrawn from the account each month.

AmityNeon

Atom fixes allow monthly interest even if interest is not paid away; the same AER for the same product for the same term is achievable. If interest is chosen to be paid away, Atom clearly shows a lower total estimated interest figure (despite the unchanging AER).

The Metro account only allows interest to be paid away, and whilst this fact is published in its key product information, the average person may not realise the repercussions of this, such as the AER not being achievable if monthly interest is chosen. There’s obviously room for improvement if a person who does realise this in branch raises a query there and then, only for bank staff to fail in providing a simple explanation.

It’s an imperfect system; there is nothing wrong with desiring better transparency. Even a single line would be sufficient: “As this account only allows interest to be paid to an external account, monthly interest will result in lower total interest from this account.” This explicit statement would likely invite further query from anyone who didn’t fully understand its meaning, before they decide to apply.

k12479

AmityNeon said:

It’s an imperfect system; there is nothing wrong with desiring better transparency. Even a single line would be sufficient: “As this account only allows interest to be paid to an external account, monthly interest will result in lower total interest from this account.” This explicit statement would likely invite further query from anyone who didn’t fully understand its meaning, before they decide to apply.

Better transparency needs to be balanced against too much information, otherwise the so-called small print gets longer and longer and people don't read it, whining "There's too much small print! Everything's hidden in the small print!".

auser99

groovyclam said:

It all hinges on the fact you think Joe Average reads ( and I stress READS ) on the account flyer:

monthly interest = 5.76% Gross / 5.91 AER
yearly interest = 5.91% Gross / 5.91% AER

Have read all your posts and it seems you've been unlucky that you've seemingly had a supposed banking professional unable to give you the 1 line explanation of why things works like they do, that randoms on a forum can give you in seconds 

BooJewels

@auser99 I mentioned this earlier but there was no response.  On the Metro web page, that same statement about interest rates has an asterisk after the AER figure, as I pasted on page 2 - which led to an explanation further down the web page - in decent size lettering. 

I don't know what 'account flyer' the OP is in possession of, but the pdf on the web page which is the 'important information summary 'document for the product, also features an asterisk after AER which is explained on the same page.  So unless the OP has some different document which failed to include this detail, it seems like the information is available.  But it does seem extraordinary that bank counter staff couldn't explain this very basic principle of savings interest when asked.

EthicsGradient

AmityNeon said:

Atom fixes allow monthly interest even if interest is not paid away; the same AER for the same product for the same term is achievable. If interest is chosen to be paid away, Atom clearly shows a lower total estimated interest figure (despite the unchanging AER).

The Metro account only allows interest to be paid away, and whilst this fact is published in its key product information, the average person may not realise the repercussions of this, such as the AER not being achievable if monthly interest is chosen. There’s obviously room for improvement if a person who does realise this in branch raises a query there and then, only for bank staff to fail in providing a simple explanation.

It’s an imperfect system; there is nothing wrong with desiring better transparency. Even a single line would be sufficient: “As this account only allows interest to be paid to an external account, monthly interest will result in lower total interest from this account.” This explicit statement would likely invite further query from anyone who didn’t fully understand its meaning, before they decide to apply.

Metro has exactly the same choices as Atom, for a 1 year fixed rate account (not "only allows interest to be paid away"). Both allow you to choose either interest at the end of the year, or monthly interest. Both show this as Gross and AER figures - Atom is currently "Annual interest: Gross 5.25%,  AER 5.25% ; Monthly interest: Gross 5.13%, AER 5.25%".

Fixed Saver Accounts - Fixed Rate Savings | Atom bank

Now, oddly,  Atom's website does not "clearly show a lower total estimated interest figure (despite the unchanging AER)". They put an "earns you around" figure next to each option, but they strangely say, for a £10,000 deposit, "£526.44" for the annual interest, and "£526.71" for the monthly interest. So they have somehow calculated that they'll give you more money if you take the interest out earlier! Their footnote does not explain how this happened, and I would contend that, on the face of it, it's Atom who are being confusing, and potentially misleading.

The difference between what you might expect of £525 interest over a year from £10,000 in a 5.25% AER yearly interest account can be explained by Feb 2024's leap day - 1.0525 ^ (366/365) = 1.052648, so we can get within a few pence. How the monthly interest figure is £526.71, I can't tell.

Another bad (misleading?) thing on the Atom website - their footnote on Gross/AER difference ends

"‘Gross’ is the rate of interest that’s payable on this account and represents the amount of tax-free interest you’ll earn in a year."

It's not "tax-free interest"; it's the interest you'll earn in a year before paying any tax.

groovyclam

It’s an imperfect system; there is nothing wrong with desiring better transparency. Even a single line would be sufficient: “As this account only allows interest to be paid to an external account, monthly interest will result in lower total interest from this account.” This explicit statement would likely invite further query from anyone who didn’t fully understand its meaning, before they decide to apply.

You have summed up my position perfectly. This whole situation could be vastly improved with your suggested sentence added to the flyer.

groovyclam

It shouldn't need to be explicitly said that you get less interest per month if you make withdrawals than if you do not. But if "Metroman" is asked about this then he should be able to tell you that you will earn more interest from the account overall if you do not opt to have the interest withdrawn from the account each month.

The account doesn't LET YOU MAKE WITHDRAWALS AT ALL. Metro don't put the interest into the account for you to withdraw. The interest goes into your current account - not into the savings account.


This is where we differ then. I think the onus should be on the bank staff to know the product and tell the customer the downsides as well as upsides in as least techy manner as possible. ( in my example that mean telling them in plain English "the monthly paying away account produces less interest" ). This can then lead into a more techy-based conversation with the customer where Gross, AER and "paying away" interest is explained to them.

You seem to want every customer to know the implications for Gross, AER and "paying away interest" before even approaching counter staff. As I said earlier - that's a big ask of the majority of the population who, for the most part, can't work out calculations to do with percentages.

Getting back to my actual experience with my Metro man - he didn't even say the interest was going to be "paid away". He was going to sell me the monthly "pay away" account and I brought up the fact the flyer said the interest will go into a different account. He confirmed that, and so I asked how the interest would be compounded then ? He confirmed it wouldn't be and that's when all my confusion started with how the monthly and yearly product could have the same AER if they make different totals of interest over the year. He was unable to answer that question as was the branch manager. I suddenly felt like I was in a den of incompetent thieves at this point.

groovyclam

auser99 said:

groovyclam said:

It all hinges on the fact you think Joe Average reads ( and I stress READS ) on the account flyer:

monthly interest = 5.76% Gross / 5.91 AER
yearly interest = 5.91% Gross / 5.91% AER

Have read all your posts and it seems you've been unlucky that you've seemingly had a supposed banking professional unable to give you the 1 line explanation of why things works like they do, that randoms on a forum can give you in seconds 

As I have said further up - the longer the conversation went on the more suspicious I got of how competent any of these people were. I mean - the branch manager couldn't explain it !