Bank miscalculated interest due at end of fixed rate investment - Lessons learnt?

Economme

Dear MSE members,

At the end of a Sainsbury's Bank, 1 year fixed rate savings account, the interest credit to my account did not seem correct.

For ending investments, I do some ending processes, which include checking the interest received calculation.

So, at  the end of the year, I spreadsheeted several different ways to calculate the expected interest, and none of them matched the amount that Sainsbury's deposited.

NB. The starting funds were not deposited in a single tranche, on a specific date, but were deposited in three amounts, several days apart. 

When I asked Sainsbury for their method of interest calculation they used, and their actual calculations, so that I could reproduce and check it, it took me several messages to get something close to reproducible details. They eventually stated that they had miscalculated, and were crediting me with an additional interest amount. 

Getting actually paid that additional amount was also made unnecessarily difficult.

My point of concern, for the wider number of Sainsbury Bank customers, and investors in general, is how many other investors have had their final interest miscalculated, and never checked, or gave up trying to check it due to obscurity of method? Should the investment industry safeguard investors from this type of 'miscalculation'? (which I would have thought the banking industry should have got pretty fool proof by now?) Is it done manually? or automatically? Should the industry provide a standard, detailed calculation, as part of maturation?, 

or is it incumbent on all investors to check individually (like a caveat emptor), each time, and challenge if so moved?

Regards.

surreysaver

What sort of investment? Or do you mean savings?

eskbanker

surreysaver said:

What sort of investment? Or do you mean savings?

From OP (as well as several references to 'investment' to be fair):  

Economme said:

At the end of a Sainsbury's Bank, 1 year fixed rate savings account, the interest credit to my account did not seem correct.

Dazed_and_C0nfused

Some context might be useful?

What was the amount of the discrepancy?

AmityNeon

A fixed rate/term with only three deposit dates should be simple enough to calculate. Nevertheless, interest is calculated automatically and errors are likely exceedingly rare these days.

I calculate interest for all my accounts and discrepancies are usually due to rounding, hardly ever more than a penny overall.

The one time I had a discrepancy of more than a pound, I asked (HSBC) how interest was calculated and they were unable to provide an answer except to state it was calculated correctly, but after escalation, they claimed I should have been paid even less than what was actually received—again, they furnished not even one calculation in support of that claim. I went to the FOS who agreed it was farcical how HSBC tried to dismiss my query with a lowball threat. In the end, I received compensation far in excess of the total interest earned, accompanied by an attached spreadsheet detailing precisely-calculated daily interest.

Economme

Thanks AmityNeon

Good to get other data, and experiences.

You seem to have got a fair result from FOS.

(I have lost confidence in the Ombudsman processes, so am not inclined to pursue that route)

It feels like the financial industry should have more robust protection/resolution from this sort of mis-calculation.

Discrepancy was £8.39, but the amount is not really the point.

masonic

I would be interested in understanding how this could have come about and whether it was the original amount credited that was wrong, or the figure the managers concocted to close your complaint (or both).

Obviously £8.39 is a major discrepancy if you were saving £800, whereas somewhat less disturbing if you were saving £80,000

Economme

masonic said:

I would be interested in understanding how this could have come about and whether it was the original amount credited that was wrong, or the figure the managers concocted to close your complaint (or both).

That was of interest to me too.

I doubt if I/we will ever know how this could come about, or if it was concocted. 

None of my guessed methods of calculation came close to their original, incorrect calculated figure.

My only unexpected 'gotcha', in my methods of calculation, was a period of 8 days in their recalculation where 0% interest was applied. I presume that this was because it was below a minimum balance for interest to apply, and that it is in the offer documentation some where. The amount of interest accrued was negligible, so I did not double check. 

Another possibility, is that someone did it manually, and just typed in the wrong interest rates/ amounts. This possibility raises lots of other red flags. A single manual only calculation is concerning, but I doubt they will ever admit to it.

I asked for how they arrived at their initial figure. They supplied me with how they have arrived at their new figure. With no acknowledgement or details supplied of their miscalculation.

I doubt if they will ever state anything that could indicate or support liability; as AmityNeon's experience (and mine) indicates 'they furnished not even one calculation in support of that claim'.

masonic

Would you be willing to share their workings for the new figure? We might be able to back-calculate how they may have arrived at the original figure that was £8.39 less.

Economme

masonic said:

Would you be willing to share their workings for the new figure? We might be able to back-calculate how they may have arrived at the original figure that was £8.39 less.

I'm more interested in the general 'lessons learnt', rather than pursuing my own individual case (very low interest! - on many levels)

For example, is mis-calculation common?; what could be the general reasons?; any lessons for the individual?; any lessons for the industry watchdogs?; for the industry; for the public?

(I also feel quite imaginative with possible methods of calculation - It is a fairly simple scenario, after all. What is missing, is something only Sainsbury's Bank could supply (their actual 'reasoning'), which I doubt they will/ or is not worth pursuing).

masonic

Economme said:

masonic said:

Would you be willing to share their workings for the new figure? We might be able to back-calculate how they may have arrived at the original figure that was £8.39 less.

I'm more interested in the general 'lessons learnt', rather than pursuing my own individual case (very low interest! - on many levels)

For example, is mis-calculation common?; what could be the general reasons?; any lessons for the individual?; any lessons for the industry watchdogs?; for the industry; for the public?

(I also feel quite imaginative with possible methods of calculation - It is a fairly simple scenario, after all. What is missing, is something only Sainsbury's Bank could supply (their actual 'reasoning'), which I doubt they will/ or is not worth pursuing).

I have seen examples where interest was not paid when it should have been, examples where interest was calculated to a different date than the account holder expected, examples where the basis of calculation differed from that the account holder expected, and where the rate of interest was not what the account holder expected. Some of these cases were an error by the bank which was quickly corrected when pointed out, and the issue was clear. Some were unreasonable expectations or a misunderstanding by the account holder. With generally more falling into the latter category. Where there has been a genuine error, it is vanishingly unlikely to apply to a single individual, so it is helpful for others to know how the sums should be done and what constitutes an error. In the case of a single individual being paid an additional sum to close a complaint, without anyone else being affected, it is very likely indeed there was no error, simply good will. A good example of this is the person who phones up First Direct every year to ask why his regular saver interest is less than the worked example, knowing the answer but being paid the difference.

The best way for individuals to learn is through the dissection of real world examples in my view. I've got very low interest in conjecture or speculation about the possibility of a mistake without facts and figures to support it.