Questions Of Cash: Always read the small print on interest rates
Saturday 21 May 2011
Q. I am receiving a paltry rate of interest on my Santander "Easy Isa". Last year, I received just £22.34 interest, compared to £373.79 the year before. I should have been notified of this reduction in interest rate: I would have switched to obtain a better interest rate. ZG, Leicester.
A. A spokeswoman for Santander says: "We were sorry to hear that [the reader] was unhappy with the interest rate applied to her Isa. We can confirm the interest applied is correct and in her statement mailing in 2009 and 2010 we enclosed a booklet advising [the reader] of our current and previous Easy Isa interest rates. Due to global market conditions interest rates have been falling on savings. The reader's account has a variable interest rate and is subject to change. Rates on our savings accounts are available via Santander UK's website, branch literature or by telephone."
We had several complaints last year about Isa interest rate cuts applied by Santander and its then subsidiaries Alliance & Leicester and Abbey. Since then, the banking standards code has been strengthened and backed by law. Financial institutions must now notify customers by letter, email or text of any reduction in interest rates before they take effect. This reader's situation is therefore unlikely to recur – though careful reading of the material sent to her by Santander should have alerted her to the reduction in rates.
Q. I have a two-year fixed deposit certificate with a nationalised Indian bank, Vijaya, paying 9.25 per cent. Does the Indian government give any guarantees similar to the UK's compensation scheme? AB, by email.
A. The Financial Services Compensation Scheme provides a guarantee for deposits held in UK and some European banks, up to a maximum of £85,000 per institution. As an Indian bank, Vijaya is not covered by the FSCS, but it is covered by India's Deposit Insurance and Credit Guarantee Corporation (DICGC), which operates as a subsidiary of the Reserve Bank of India (the central bank). Under this guarantee, deposits are insured to a maximum of 100,000 rupees – about £1,380. So while you are receiving an attractive rate of interest, a high risk is attached to it. We wrote to the company secretary of Vijaya regarding your enquiry but he failed to reply. It is worth noting that one of the institutions consistently near the top of the best-buy tables at present is FirstSave – a Nigerian bank whose accounts are operated in the UK by FBN, which is registered with the Financial Services Authority and covered by the FSCS guarantee.
Q. In 2006, I made mistakes with my finances which damaged my credit records. I am now 37 with a stable life and job. I would really like to get on the property ladder but I cannot because I have two default notices on my credit file. HSBC issued the notices in 2006 but I was not notified. I believe that if HSBC cannot provide an original copy of the letter to me, showing my full name and address, it cannot prove that I received the letter. If I had received the letter, I would have done something about it.
According to Experian, the two default notices are managed by CL Finance Ltd. I have asked CL Finance for a copy of the default letter but it says it cannot remove the defaults. HSBC says the same. I have complained to the Financial Ombudsman Service, which says it cannot help with cases as old as this. I have proof that HSBC wrote to me at the wrong address: it wrote to Flat 2, No 24, when I lived at Flat 2, No 22. It also says the default letter production is automated and is unable to produce a copy of the actual letter. EZ, London.
A. HSBC rejects your argument. It says your account was passed for collection to an agency in September 2006, at which time a final demand letter, including default notice, was sent to your correct address. It says its records are clear and all correspondence from HSBC was sent to the correct address. It was only when a second collection agency took over debt collection that a wrong address was used – more than a year after the original default notice was sent to the right address. You have not told us the value of the debt, but our advice is that, rather than dispute the legality of the debt record, you should instead now take advice on how to negotiate a mutually acceptable package of repayments. Advisers who might assist you include Citizens Advice, the Debt Advice Foundation and the Consumer Credit Counselling Service.
Q. I am having a problem with O2 about my mobile phone contract and data allowances. I upgraded my contract to an Apple iPhone 4 last July, signing up for two years at £30 a month. For this I am supposed to get 300 minutes and unlimited texts and data, and this is written clearly in my contract. I was never told when taking out the contract that there might be a cap on my data usage. I am not a heavy user of mobile data, only occasionally using it for Facebook and internet browsing.
In September, O2 told me it was introducing a cap on the data allowance on my contract, set at 500MB. I have complained repeatedly that it is unfair to amend my contract after it was agreed and I have had to purchase an extra bolt-on to raise my data allowance: every month I either use more than 95 per cent of my data allowance or go over it. JH, Watford.
A. O2 argues that when your contract was upgraded the tariffs "were clearly advertised as having a data cap", with a promotional period of unlimited data that ended last September. We suggest you contact the industry ombudsman, Otelo, to adjudicate on the dispute.
Questions of Cash cannot give individual advice. But if you have a financial dilemma, we'll do our best to help. Please email us at: firstname.lastname@example.org.
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