better banking

Case - 49831

2016 - 2017

Bank accounts

Savings account

Mrs V sold her property and put the proceeds in a non-interest-bearing account. Several days later she called the bank to ask about savings accounts. She said she did not want a term deposit because she might need the funds at short notice. The staff member told her savings account A was best for her so Mrs V transferred the funds into this account.

Nine months later, concerned at how little interest her money was earning, Mrs V called the bank. It said it had another type of savings account (account B) that paid bonus interest if the customer made a monthly deposit and did not withdraw any money from the account in that month.

Mrs V complained that the bank should have told her about the alternative when she first called to set up a savings account, and that she would have selected this account if it had done so. She asked the bank to compensate her for the difference in interest between the two accounts. The bank declined and Mrs V complained to us.

The bank argued account B was only suitable for customers who did not intend to make withdrawals, but we disagreed. Granted, account B did not pay bonus interest if a customer withdrew from the account, but the interest it paid was significantly higher. We calculated that keeping her funds in account B for only three months would have earned Mrs V enough interest to outweigh any interest lost through withdrawals. We therefore considered account B was suitable for Mrs V.

We could not establish what information the bank gave her when she first called to ask about savings accounts because the bank kept no recording or diary note of the call. As such, we accepted Mrs V’s version of events. Having found account B was suitable, we concluded that the bank did not give Mrs V sufficient information about its savings account options.

However, we did not consider the bank was responsible for Mrs V’s decision to leave the funds in the account for nine months. Customers should review their investments periodically to ensure they continue to meet their needs. We therefore decided the bank should compensate Mrs V for the difference in interest for the first three months the funds were in account A.