Virgin One account - WARNING!

money4nothing

Hello all -

I have had a Virgin One account for 7 years (almost since its launch). I love the fact that they are flexible and fair, i.e. when interest rates move up or down, I have always received a letter saying that my interest rate has changed by the same amount up or down from midnight on the day of the change (midnight Thursday)... UNTIL NOW!

As you probably know, interest rates dropped by 0.25% on Thursday. My usual letter from Virgin One arrived today but now my rate does not fall until 31 AUGUST... 4 weeks later!

CALL TO ACTION: If you have a Virgin One account, call them and tell them their behaviour stinks. Tell them RBS ownership is corrupting their brand integrity. Ask for a written reply. Use this web-site to research other mortgage deals that offer the same flexibility (current account mortgage) and ARE fair. Move your mortgage.

I can't help thinking that this behaviour is driven by the fact that they are now owned by RBS.

Please let me know if this is helpful to you and also if you have any good tips on other mortgage providers.

Thanks and happy money saving!

bunking_off

Haven't had my letter yet, but would agree that if it is the case, it stinks. Will write to them.

However, working it out, for my account that has an impact of £9.53. Annoying, yes; reason enough to move my account elsewhere, no.

money4nothing

Hi bunking_off -

Fair point on the monetary impact overall.

It all starts with a little step - what will they try and do next? Let's stop them in their tracks now!

zag2me

I thought this was pretty much standard to wait a month to pass on the interest cuts? A common tactic to make more money out of us I guess.

bunking_off

zag2me wrote:

I thought this was pretty much standard to wait a month to pass on the interest cuts? A common tactic to make more money out of us I guess.

I don't think it is so unusual for the high street banks. However, the One Account has always updated the interest rates - both up & down - at 1800 on the day that the BoE announces the change.

Money4nothing - I agree on the drip, drip of changes scenario, it's just that I'm not prepared to go through the expense and hassle (remember, a move involves changing all the DDs, changing all the standing orders, changing whom my employer pays etc etc) for the sake of something that at most will amount to £30 or £40 a year : bigger fish to fry and all that. However, definitely agree with your view of the strongly worded letter....makes me feel better even if it has no effect!

Obviously, only a limited number of One Account holders will access this site and read this thread, but I do think they'll get some "feedback" because the perception I have is that OA holders tend to manage their finances pretty closely and will spot this ruse a mile off.

stevenp_3

DONT DEAL WITH VIRGIN ONE & RBS

basically involved with house share - joint mortgage

moved out years earlier but still paying half mortgage. werent told that the other half wasnt been paid, no efford in contacting me at all even when they took me to court with a possession order!

thats right i had NO IDEA i had a law suit against me, they NEVER TOLD ME THEY WERE TAKING ME TO COURT!!!! i still havent had a single returned letter explaining their actions!

Browntoa

I've emailed them...I'll post their reply

Browntoa

got my reply:-

Thank you for contacting us through our website. We're making our change to interest rates at the same time as the Royal Bank of Scotland group changes it's variable rate products. The Royal Bank of Scotland Group does have tracker products where the rates may change sooner. However, these are a different type of product to the One account in that their rates are designed to track the Bank of England base rate. If you have any further queries with this or any other matter, please feel free to contact us via our online service, or call us on 08456 000 000, we are here 24 hours a day, seven days a week. Kind regards Rebecca Brooks The Virgin One account

I have responded saying that this does not answer my question, mainly that before this was done on the same day, not after 30 days

Conrad

money4nothing wrote:

Hello all -

I have had a Virgin One account for 7 years (almost since its launch). I love the fact that they are flexible and fair, i.e. when interest rates move up or down, I have always received a letter saying that my interest rate has changed by the same amount up or down from midnight on the day of the change (midnight Thursday)... UNTIL NOW!

As you probably know, interest rates dropped by 0.25% on Thursday. My usual letter from Virgin One arrived today but now my rate does not fall until 31 AUGUST... 4 weeks later!

CALL TO ACTION: If you have a Virgin One account, call them and tell them their behaviour stinks. Tell them RBS ownership is corrupting their brand integrity. Ask for a written reply. Use this web-site to research other mortgage deals that offer the same flexibility (current account mortgage) and ARE fair. Move your mortgage.

I can't help thinking that this behaviour is driven by the fact that they are now owned by RBS.

Please let me know if this is helpful to you and also if you have any good tips on other mortgage providers.

Thanks and happy money saving!

One Account & RBS pay the largest commission in the prime mortgage market, mmmmmmmmmmm, Ive always been highly suspicious and as such rarely recommend thier products. IF also pay higher than average commssions.

Typical commission paid by Halifax, Abbey, C & G, Woolwich, Nationwide and virtually all other high street lenders is 0.3%. One Account pays between 0.5% - 0.65%. RBS pay up to 0.7%.

First Active (again RBS) operate on similar lines.
When Ive met with the reps from Scottish lenders they candidly say they will only offer products that have a better tha typical profit margin and are not in the ABBEY, NATIONWIDE, HALIFAX type arena.

WHY IS THAT I ASK?

Ive not read threads on here about offsetting but Im highly sceptical of it. Lenders like One Account pay higher commission for a reason.
I once spent days comparing the One Account to the best discounted mortgages. My figures showed it far better to take the discounted route and remortgage every 2 - 3 years. The saving on rates could then be used to overpay the debt.

One last thought, Abbey released thier flexible / offset products a couple of years back and again offered higher commission than on thier other products. These organisations are not charitys.

bunking_off

Conrad wrote:

I once spent days comparing the One Account to the best discounted mortgages. My figures showed it far better to take the discounted route and remortgage every 2 - 3 years.

Given this is a thread where we're supposed to be diss-ing the One Account, it wouldn't be right of me to defend it. However, the One Account isn't the only current account mortgage out there - a fact I reminded RBOS about in my letter to them - so let's take this as a defence of current account mortgages in general.

Conrad, you're correct that if a current account mortgage is operated like a normal mortgage, it's cheaper to go down the discounted route. However, if the concept is exploited, I don't think it's so clear cut, indeed I'd argue that it isn't possible to be without putting an economic value on flexibility. Every analysis I've seen of the subject has been simplistic. Perhaps if I describe some of the things I do, it'll illustrate.

1) Although it's physically a single account, I notionally run my mortage as 3 overlaid loans : a loan to pay for the house plus 2 to pay for the cars. I have a spreadsheet which calculates what I should owe on each loan then adds them together, so if I owe more than that I'm behind plan, less than that ahead of plan.

2) My house loan (aka mortgage) was originally for 25 years. 5 years on, a 15 year total term is my current goal. Some of this is by pro-active overpayment : I originally targetted paying £700 in notional payment to this loan whereas now it's nearer £890. However, much of it is because if I spend less than I earn, it overpays the mortgage - no forethought, it just happens. What I tend to do on an annual basis is if I'm consistently managing to overpay, I make the schedule more aggressive.

3) I operate my car loan over 4 years. If I'm overpaying, I might shorten the loan period...typically it tends to take me 3 years. This year, only one year after getting a new car, I decided I was bored with it so part-exed it. To do this I just stuck an extra £10k on my notional car loan and reset the period to pay in another 4 years. The only contact with a financial institution I needed was a courtesy call to tell them I was about to stick £10k on Switch (in fact, this was my first ever chip & pin transaction - don't do things by half).

4) My wife's car loan is over 5 years. However, we managed to get a 0% deal, but it's only over 3 years. Therefore, we treat the £350 repayment on the 0% deal as being £250 that she's paying, and £100 that's accruing on her notional car loan in the mortgage. As such, her loan within the mortgage consists of something that goes up by £100/month for the next 3 years, then will be repaid at £250/month over the following 2.

5) I'm reasonably conservative with my stoozing - see some folks on the credit card board. However, I've transferred £25k of my mortgage onto 0% credit cards. If these deals dry up, no problem, I can transfer the debt back onto my mortgage at the click of a button.

6) My expenses came in yesterday - £2k. Most of them relate to an Amex bill, not due to be paid for 3 weeks. In the meantime that £2k's reducing my mortgage.

7) My wife was expecting a baby - unfortunately didn't come to fruition. However, if it did, we were going to get by through taking a couple of years holiday from the mortage, just letting it accrue in the meantime. No approval needed.

8) My company offers SAYE schemes - save for 3 years, then have the option of buying shares at today's price minus 20%. It's a one way bet because in the worst case situation the shares bomb so you don't exercise the option and you get your cash plus interest back. Couple of years ago my company was in the doldrums - dot com crash etc. Therefore, the shares were ridiculously under-priced...SAYE was an even bigger one way bet than normal. My colleagues put in what they could afford. I plumped for the maximum payment, reasoning that if I couldn't afford it, it'd just mean my mortgage would ramp up a bit. I know from history that you don't value shares until the day you sell them, but currently this flexibility means I'm sitting on a £25K gain, whereas my colleagues will get perhaps half of that.

Now, many of these things you could replicate by having a conventional mortgage, a high interest savings account and overpaying/right sizing your mortgage when the discount comes up for renewal. However, it would be a struggle and take a lot of effort. For my money it isn't worth the grief.

E.g. (3) - I'd have to grovel to the loan company. (4) - I doubt I'd find a loan company that would allow that. (5) - doing this with a conventional mortage is risky because what happens if you can't move your stooze pot when the deal expires. (6) - this morning I'd have to move money into savings, then take them out again in a fortnight. (7) - again involves grovelling. (8) - would involve foresight of exactly how much money I'd be short, then a loan to cover that.

I guess a good analogy would be between a Sky+ box and a DVD recorder with hard drive. Both allow you to achieve notionally the same goal - record TV programmes. However, the former revolutionises how you watch TV, as it learns what you like and builds a library of programmes you'd enjoy. You wouldn't find many Sky+ owners willing to give it up. It isn't right for everybody though, e.g. I concluded that the flexibility it gave wasn't worth the cost for me so bought an HD DVD recorder. It's the same with current account mortgages - they're not for everybody, but I doubt anyone who's used one to the full would go back to a conventional mortgage because it'd be like a straitjacket. One Account know this, which is why they believe they can get away with the drip, drip approach....however, they need to remember that they're no longer unique in the market.

Fairdo_2

Conrad wrote:

One Account & RBS pay the largest commission in the prime mortgage market, mmmmmmmmmmm, Ive always been highly suspicious and as such rarely recommend thier products. IF also pay higher than average commssions.

Typical commission paid by Halifax, Abbey, C & G, Woolwich, Nationwide and virtually all other high street lenders is 0.3%. One Account pays between 0.5% - 0.65%. RBS pay up to 0.7%.

First Active (again RBS) operate on similar lines.
When Ive met with the reps from Scottish lenders they candidly say they will only offer products that have a better tha typical profit margin and are not in the ABBEY, NATIONWIDE, HALIFAX type arena.

WHY IS THAT I ASK?

Ive not read threads on here about offsetting but Im highly sceptical of it. Lenders like One Account pay higher commission for a reason.
I once spent days comparing the One Account to the best discounted mortgages. My figures showed it far better to take the discounted route and remortgage every 2 - 3 years. The saving on rates could then be used to overpay the debt.

One last thought, Abbey released thier flexible / offset products a couple of years back and again offered higher commission than on thier other products. These organisations are not charitys.

What's that got to do with the thread?

Firstly, that might be the case with the Network you use, but it is not the same with every network out there, so some brokers get paid more or less for the same mortgage lender.

Also, you can have crap products as well as good with the likes of Abbey, Halifax et al.

A decent broker will look at the benefits of the lenders product for their particular client and not corrulate it to the commission they will be paid.

If they based it on what they were getting paid, rather than what is best for the client, then they are crooks and should be found out at some point through their product mix.

I personally will not discount a lender because they pay more, but I would not let it influence my recommendation either.

As far as I recall, I thought I'd get paid about the same from Abbey, Halifax or One Account.

Mind you, I deliberately ignore fees so that I have less chance of being influenced by that factor.

I don't know how I do it, but I have always managed to deliberately not retain that information. However, you cannot help, but get a reasonable idea, but I keep it vague in my mind, whichg is why I sound vague now.

RBS don't usually get my business because the products don't tend to suit my clients best, but One Account get a reasonable share of that type of business. There seem to be plenty of One Account customers that contribute here and they don't sound silly enough to fall into a product that is no good, so ther must be merits to the rates they offer.

I also feel that there seems to have been plenty of customer satisfaction prior to this latest move and I am sure commission rates have not just shot up!