Metro Bank Misleading Customers ( maybe breaching advertising standards )

groovyclam

k12479 said:

But adding twenty four extra words clearly isn't going to be sufficient because you, and a chunk of the population, will still need a Metroman to waffle on further, so the document would need to be extended to cover all the basics. Would you like a definition of 'Account', of 'Interest' added? The flyer, or these Product Information sheets, tend to be 2 pages, more information for those that need it is available in general documents and websites. That branch staff are incompetent is another matter.

No - you don't need to define "account" or "interest" or "gross" or AER etc. etc. on the sheet because that's the job of the "so-called" skilled professional sitting behind the banker's desk. And they can take those explanations as deep and long or as short and shallow as the customer wants/needs them to be.

Malthusian

auser99 said:

You'll see it's a theme about staff at banks not knowing key details.
I had a family member told that she had to declare interest herself to HMRC and that banks don't do it. Which isn't true on the latter part at all, and would only be true on the former if she was self assessing.

"The banks don't declare interest to HMRC" may technically be incorrect, but the information provided by banks to HMRC doesn't change the customer's obligation - or lack of obligation - to declare and pay tax to HMRC. 

If they told customers "We tell HMRC about your interest income", customers are going to hear "we've sorted it for you" and then complain when they get in trouble. It's a case of getting it wrong in the right direction.

Depending on the amount of interest and the individual's other income, bank interest may trigger a requirement to complete a tax return.

If she wasted time looking up self assessment and finding she didn't need to do anything because her interest income wasn't over the thresholds - then I still can't see that as a failing by the bank, because the onus is on the taxpayer to know the rules.

masonic

groovyclam said:

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be able to tell you that you will earn more interest from the account overall if you do not opt to have the interest withdrawn from the account each month.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.

As I'd explained in the paragraph above the one you quoted, paying interest to an external account is a withdrawal in all but name. It is equivalent to manually withdrawing it from an access account on the date it is paid, except this arrangement is set up in advance through selecting an option in the application. Although we don't see such products often, a savings account that allowed you to set up a standing order to another account to provide for monthly expenditure would also be entitled to quote an AER that wouldn't be achievable for anyone electing to make such regular withdrawals. Likewise an account with a maximum balance eligible for interest would be entitled to quote an AER even though some customers might keep their balance maxed out and therefore not be able to earn compound interest through the manner in which they opted to use the account.

groovyclam said:
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.

I don't think we disagree that the branch staff should know the product. If you were pushed towards the monthly interest account, then he should have been able to justify the reasons behind that. If you had no need for the monthly interest, and you didn't get into discussions around interest falling into one tax year or another, it would not have been the most appropriate choice. So that would be a concern.

Regarding the product information, I actually do think they could have improved the summary box information by including estimated balance information for both monthly and annual/maturity options. They could have included that in place of the "interest earned" column (as it isn't hard to subtract £1000 from the estimated balance)

groovyclam

masonic said:

Regarding the product information, I actually do think they could have improved the summary box information by including estimated balance information for both monthly and annual/maturity options. They could have included that in place of the "interest earned" column (as it isn't hard to subtract £1000 from the estimated balance)

 At least I'm not the only one who thinks this - I feel less like a crazy loon shouting in the street now.

groovyclam

OK now this is weird - I've just logged into my  Metro Bank app and looked at the account that all this thread is about - guess what it says the AER is now on screen.... 5.76 % !!!

I logged on via computer to look what is reported that way but it just says "Interest 5.76" and doesn't specify if that is gross or AER.

What is going on people ? I am utterly now confused.

masonic

groovyclam said:

masonic said:

Regarding the product information, I actually do think they could have improved the summary box information by including estimated balance information for both monthly and annual/maturity options. They could have included that in place of the "interest earned" column (as it isn't hard to subtract £1000 from the estimated balance)

 At least I'm not the only one who thinks this - I feel less like a crazy loon shouting in the street now.

I think that feeling was most likely caused in response to taking it from 'the product information could have been clearer' to 'breaches advertising standards' and 'as a result, FCA needs to change the metric for comparing interest that's been in use for the last few decades'. Without the hyperbole I suspect you'd have seen less controversy.

groovyclam said:

OK now this is weird - I've just logged into my  Metro Bank app and looked at the account that all this thread is about - guess what it says the AER is now on screen.... 5.76 % !!!

I logged on via computer to look what is reported that way but it just says "Interest 5.76" and doesn't specify if that is gross or AER.

What is going on people ? I am utterly now confused.

They think this thread has run its course, so have hacked your computer to put an end to it (still showing up with the same details for me).

AmityNeon

EthicsGradient said:

Yes, I am sure both types are offered by Metro; several times in what you've quoted in this one post alone we have "paid monthly or annually", or the equivalent words. groovyclam said this in the very first post of the thread; they've always known it.

Reread what you wrote when you quoted me:

EthicsGradient said:

Metro has exactly the same choices as Atom, for a 1 year fixed rate account (not "only allows interest to be paid away").

Metro does not offer "exactly the same choices as Atom". Metro only allows interest to be paid away; Atom allows the choice for interest to be paid into the same account or to a different account. With Atom, the illustrated interest figures dynamically change to reflect the option chosen; this is an example of transparency that Metro could offer, and the only reason I initially mentioned Atom.

EthicsGradient said:

Well, the advertising/marketing is what you get before you install the app. Their web page says nothing about "asking for monthly interest, but then having the option to feed it back into the fixed term bond after all" - the page notes that after the initial 7 day funding period, you can't add anything more to the account. So the 2 options for the account, according to the web page, are "let the interest compound inside it for a year, and then get everything out", or "take the interest out each month". And they have misleadingly said the latter gets you more money, even if the app indicates that for the confusing option of "get monthly interest out, but automatically pay it back into the account which does does not allow you to pay more into".

I can't find anything on Atom's webpage that advertises what could be construed as "take the interest out each month". Based on how they calculate interest, the monthly interest figures are correct considering their footnote:

* The estimated total interest is based on our gross rates. It assumes interest is paid into the account and you deposit the full amount the day the account opens. The date you open the account may affect the amount of interest you receive.

Their app simply offers the additional option of having interest paid away. As previously mentioned, if that option is chosen, the illustrated interest figures dynamically change to reflect the option chosen.

EthicsGradient said:

There should anyway not be a way for interest to be "paid" and then fed back into the account and for it to end up as larger (even if only marginally) than if you'd just left it in the account. It's nonsense.

Irrelevant. Atom offer that choice and are transparent about it.

EthicsGradient said:

AmityNeon said:

EthicsGradient said:

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.

Atom adds an extra day (1/365) of interest: 0.0525 * (366/365) = 0.0526438, rounded to 5.2644% exactly.

But that's the AER figure, for which the interest must be calculated with powers, not multiplication - that's the entire point of this thread. One day's interest is not "(1/365) of 0.0525".

So what would one day's interest be, according to you?

I was calculating the total interest figure down to the pence, not just "within a few pence". The total interest figure includes an additional day of interest, calculated at (1/365) of the gross rate (5.25%), so the total interest received on a balance of £10,000 for 366 days is £526.44, which is equal to 5.2644% of the balance.

Your calculation compounds interest after day 365, by multiplying the total (interest-added) balance of 1.0525 by the (1/365) root of the gross rate, which is not what happens in practice.

EthicsGradient said:

AmityNeon said:

EthicsGradient said:

How the monthly interest figure is £526.71, I can't tell.

366 days of (1/365) interest in conjunction with monthly rounding:

 Month  Days       Balance     5.13%
Nov-23    30    £10,000.00    £42.16 
Dec-23    31    £10,042.16    £43.75 
Jan-24    31    £10,085.91    £43.94 
Feb-24    29    £10,129.85    £41.29 
Mar-24    31    £10,171.14    £44.32 
Apr-24    30    £10,215.46    £43.07 
May-24    31    £10,258.53    £44.70 
Jun-24    30    £10,303.23    £43.44 
Jul-24    31    £10,346.67    £45.08 
Aug-24    31    £10,391.75    £45.28 
Sep-24    30    £10,437.03    £44.01 
Oct-24    31    £10,481.04    £45.67 
                £10,526.71

well, that's dubious.

Why? Is there something wrong with forward-projecting monthly compounding and illustrating more precise total interest figures to potential applicants at the point of application? Or do you think my presumptive calculations are wrong despite resulting in precisely £526.71 of interest?

groovyclam

masonic said:

 (still showing up with the same details for me).

Have you got this account ? 
I'm in the Metro app

It lists the account on screen thus:
===============================
Fixed Term Savings a/c
MYACCTNUMBER00000 / Fixed Term Savings A/c
£ MyBalance
5.76% AER
===============================

So suddenly the AER that was on all the flyers as 5.91 is now listed as 5.76 ( i.e. the same as the gross for the monthly pay-away ).

Are Metro admitting you can't make 5.91 on the monthly pay-away now ?

masonic

groovyclam said:

masonic said:

 (still showing up with the same details for me).

Have you got this account ? 
I'm in the Metro app

It lists the account on screen thus:
===============================
Fixed Term Savings a/c
MYACCTNUMBER00000 / Fixed Term Savings A/c
£ MyBalance
5.76% AER
===============================

So suddenly the AER that was on all the flyers as 5.91 is now listed as 5.76 ( i.e. the same as the gross for the monthly pay-away ).

Are Metro admitting you can't make 5.91 on the monthly pay-away now ?

I was looking at the information on the website. I don't have the account. If the account you have is listed as 5.76% AER, then you'll be getting about 5.61% gross monthly. But it is probably a glitch.

masonic

AmityNeon said:

EthicsGradient said:

AmityNeon said:

EthicsGradient said:

How the monthly interest figure is £526.71, I can't tell.

366 days of (1/365) interest in conjunction with monthly rounding:

 Month  Days       Balance     5.13%
Nov-23    30    £10,000.00    £42.16 
Dec-23    31    £10,042.16    £43.75 
Jan-24    31    £10,085.91    £43.94 
Feb-24    29    £10,129.85    £41.29 
Mar-24    31    £10,171.14    £44.32 
Apr-24    30    £10,215.46    £43.07 
May-24    31    £10,258.53    £44.70 
Jun-24    30    £10,303.23    £43.44 
Jul-24    31    £10,346.67    £45.08 
Aug-24    31    £10,391.75    £45.28 
Sep-24    30    £10,437.03    £44.01 
Oct-24    31    £10,481.04    £45.67 
                £10,526.71

well, that's dubious.

Why? Is there something wrong with forward-projecting monthly compounding and illustrating more precise total interest figures to potential applicants at the point of application? Or do you think my presumptive calculations are wrong despite resulting in precisely £526.71 of interest?

This old chestnut again. You are correct, interest is not paid and compounded daily, so the denominator of any exponential used to get from AER to a gross daily rate should be 1, 2, 4, or 12 depending on the account selected, not 365. But we have the gross rate and interest accrues at 1/365 of the gross rate per day on the balance of the account, which does not include accrued but unpaid interest.