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You can find the current article at its original source at http://www.guardian.co.uk/money/2013/feb/24/banks-unclear-bond-withdrawal-penalties
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| Version 2 | Version 3 |
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| Banks unclear over bond withdrawal penalties | Banks unclear over bond withdrawal penalties |
| (about 21 hours later) | |
| Some of Britain's biggest high-street banks are failing to make it clear to consumers who take out fixed-rate bonds that they could lose some of their original savings as well as interest earned if they close their accounts early. | Some of Britain's biggest high-street banks are failing to make it clear to consumers who take out fixed-rate bonds that they could lose some of their original savings as well as interest earned if they close their accounts early. |
| Fixed-rate savings accounts and Isas lock people's savings away for up to five years and promise to pay the same rate of interest over that period. Most do not allow savers access to their money at all in that time, although some allow partial or total withdrawal of funds before the end of the term. | Fixed-rate savings accounts and Isas lock people's savings away for up to five years and promise to pay the same rate of interest over that period. Most do not allow savers access to their money at all in that time, although some allow partial or total withdrawal of funds before the end of the term. |
| Those that do allow access charge penalties up to the equivalent of a year's interest. Crucially, for someone who has not accrued enough interest, part of this penalty can sometimes be taken from the money originally invested, but not all providers make this clear. | Those that do allow access charge penalties up to the equivalent of a year's interest. Crucially, for someone who has not accrued enough interest, part of this penalty can sometimes be taken from the money originally invested, but not all providers make this clear. |
| An investigation for the Observer by website savingschampion.co.uk found that NatWest and HSBC both fail to make it clear on their websites that early withdrawals could lead to a saver getting back less than they paid in. | An investigation for the Observer by website savingschampion.co.uk found that NatWest and HSBC both fail to make it clear on their websites that early withdrawals could lead to a saver getting back less than they paid in. |
| Anna Bowes, a director of savingschampion, says the information about penalties was not clear on NatWest's website even when she searched for it. She only found it after contacting the bank to ask where it was. "Even then the information does not make it clear that your capital could be affected," she says. | Anna Bowes, a director of savingschampion, says the information about penalties was not clear on NatWest's website even when she searched for it. She only found it after contacting the bank to ask where it was. "Even then the information does not make it clear that your capital could be affected," she says. |
| The NatWest penalty clause says that closing the fixed-rate bond early will incur "an interest charge equivalent to 90 days' gross interest". | The NatWest penalty clause says that closing the fixed-rate bond early will incur "an interest charge equivalent to 90 days' gross interest". |
| Bowes said the information from HSBC was equally unclear and difficult to find. | Bowes said the information from HSBC was equally unclear and difficult to find. |
| This contrasts with BM Savings, which Bowes holds up as a good example of clear information. It says early withdrawal penalties "will be taken from the account balance and, depending on when the withdrawal is made, may result in you getting back less than originally deposited". | This contrasts with BM Savings, which Bowes holds up as a good example of clear information. It says early withdrawal penalties "will be taken from the account balance and, depending on when the withdrawal is made, may result in you getting back less than originally deposited". |
| "This [the potential affect on capital] is definitely somethingpeople should be made aware and why they must be certain that they can tie up the money, otherwise they might get a nasty shock if they do need access," she added. Leeds building society is unusual in offering savers early access to some of their cash without penalty. Last week it launched a range of fixed rate bonds paying up to 2.5% annually and access to 25% of the funds, without notice or penalty, at any time. Other banks, including Santander, do charge the equivalent to 90 days and 120 days interest, dependant on term but, crucially, where interest accrued does not sufficiently cover the charge the penalty will not be taken from the original savings. | "This [the potential affect on capital] is definitely somethingpeople should be made aware and why they must be certain that they can tie up the money, otherwise they might get a nasty shock if they do need access," she added. Leeds building society is unusual in offering savers early access to some of their cash without penalty. Last week it launched a range of fixed rate bonds paying up to 2.5% annually and access to 25% of the funds, without notice or penalty, at any time. Other banks, including Santander, do charge the equivalent to 90 days and 120 days interest, dependant on term but, crucially, where interest accrued does not sufficiently cover the charge the penalty will not be taken from the original savings. |
| The Financial Ombudsman Service says: "We would urge any consumers who have been hit by these penalties and feel they were not made clear to come to us." | The Financial Ombudsman Service says: "We would urge any consumers who have been hit by these penalties and feel they were not made clear to come to us." |
| Top savings accounts | Top savings accounts |
| Coventry BS | |
| Skipton BS | |
| Manchester BS | |
| Powered by MoneySupermarket for the Guardian | Powered by MoneySupermarket for the Guardian |