2015 - 2016

Investment

Term deposit

Mr E had money invested in a term deposit. When each term matured, the money would be rolled over for a new term. Mr E had never needed access to his money, but he understood he could, if necessary, get immediate access before a term expired, subject to an interest adjustment. 

Mr E received a letter from his bank advising that it had introduced a new policy for early withdrawals from a term deposit. Customers wishing to access their term-deposit funds before maturity date now had to give the bank a month’s notice. The notice period did not apply if a customer was experiencing financial hardship. 

Mr E complained to the bank that, in applying this policy to existing term-deposit customers, it had varied the contract without customers’ consent. The bank explained that it had introduced the new policy in order to comply with global banking requirements regarding liquidity levels. Mr E understood this explanation, but still did not accept it should apply to existing term deposits, and asked us to investigate. 

We noted that, generally speaking, a contract cannot be varied without the consent of both parties. We reviewed the term-deposit contract and concluded that the bank had not varied it by introducing the new early withdrawal policy. Under the contract, a customer agreed to invest money for a set term. It did not give the customer a right to break the term deposit before the maturity date. Customers could request early withdrawal, but the bank had the discretion to accept or reject the request. We did not therefore consider that the new policy altered the existing rights and obligations spelt out in the contract.