The investors had money in a Tessa account paying 7.5 per cent tax-free. They were informed on 20 January about the new 2nd Edition Tessa with a tiered interest rate.
Abbey did not mince its words in the first letter about how good the new Tessa would be. The Tessa 2nd Edition would 'provide many of the same benefits as your existing account - but also has interest rates which increase depending on your investment level'.
Abbey set out the new rates in full. An investment of between pounds 1 and pounds 2,999 earns interest of 7.1 per cent gross, pounds 3,000- pounds 4,799 7.3 per cent, and pounds 4,800- pounds 6,599 7.4 per cent. The top rate of interest, 7.5 per cent, is paid on balances above pounds 6,600.
Abbey was at pains to point out that existing Tessa holders could transfer to the Tessa 2nd Edition 'without penalty and without giving notice and there will be no effect on your tax status'.
However, what the letter does not say is that existing Tessa holders already get interest of 7.5 per cent on their entire balance from pounds 1 upwards. They do not need to have more than pounds 6,600 in the account to qualify for this rate.
A spokesman for Abbey admitted that the wording on the letter was unclear. He said that there had been no intention to mislead. 'We are going to send out another letter in the next few days apologising for this confusing letter and telling people exactly what they should do - whether they should stay where they are or consider transferring.'
Meanwhile, telephone calls to two Abbey branches, one in Surrey and one in Middlesex, provoked a far more open response than the obliquely worded letter from head office.
When asked whether it was worth transferring from the current Tessa to a Tessa 2nd Edition the reply from both of the branches was: 'No, not at the moment. You are better off staying where you are.'
However, one branch did hint that the rate might be going down on the existing Tessa and that investors should keep an eye on the rates.
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