Sneaky T&C's in New BoI 3 Year Deposit Product

However, this point does not give BoI a green light to (1) put the product in their fixed term deposits section, (2) to state that there is a "fixed rate of interest" in the header description on the website and (3) to preclude to mention that the rate beyond year 1 is at the banks discretion in advertisements.
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The key point there is that banks are under no obligation to offer such a product if they have issues with the way Revenue have implemented rules around it. It is the banks choice to offer this product.
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The advertising for this is clearly in breach of the Consumer Protection Code in that many customers will be misled into thinking that they are getting this rate for three years.

Bank of Ireland's treatment of customers with tracker mortgages in Ireland and, more especially, in the UK, makes it absolutely clear that they cannot be trusted with a product like this. They simply should not be offering this product.

If they do offer it, they must advertise it within the CPC guidelines. It should not mislead people into thinking that they are getting a fixed rate for the three years.

If AIB is offering the same product, they should stop doing so as well.

Why did other lenders not offer this product? Do AIB and BoI have a competitive advantage in attracting deposits, if the other banks refuse to offer it?

They should campaign to get the government to change the rules and then offer a proper product.
 
I do hope that this is brought to the attention of the Central Bank in mass. Unfortunately I'd say they will get away with this as of who they are. Animal Farm Irish style springs to mind.
 
Brendan Burgess said:
No. Did you?
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Ah but you're at the forefront of leading the charge against shoddy practices by financial institutions and if you get a result you can get a press article about it.

On a more serious note, I won't be complaining as it does not affect me. And ordinary people will probably be on here in one years time when they realise they've been tricked into a false promise and ended up with practically zero interest.
 
I have a five year term deposit with Bank of Ireland Private, and while I went into it with my eyes open there are some conditions that could be considered sneaky. The term is 5 years 1 month, so it didn't have to be covered by the ELG. It can be closed after four years at the bank's discretion (presumably if they feel they can get a better rate elsewhere and no longer need your money). The C.A.R. was calculated and advertised incorrectly. I brought it to their attention and said it didn't meet CB guidelines. They said the C.A.R. was calculated as if interest paid out annually was reinvested at the same rate... even though you can't make additional deposits in the lifetime of the product!
 
mercman said:
I do hope that this is brought to the attention of the Central Bank in mass. Unfortunately I'd say they will get away with this as of who they are. Animal Farm Irish style springs to mind.
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The Financial Regulator has spectacularly failed to protect consumer interests ever since it was created by Bertie and Brian in 2003. Why would anyone expect that to change now? I see the Central Bank have just re-appointed ex-director general Tony Grimes. On an undisclosed salary (it was €249K in 2010) plus his current €65K pension, apparently? Presumably what clinched the re-hire was his assertion back in 2010 (when he retired just ahead of the Nyberg report) that he could do nothing but sit back and watch while Neary blew up the Irish banking system.

Good times.
 
There was a readers letter/query follow-up in the Irish Times Pricewatch section yesterday (can't find online link) about a BoI 40-day notice account; reader had complained a couple of weeks ago; got a 'lovely' letter back from BoI saying that the bank were in the right - see page 6 of the attached 10 pages of T&Cs - 'the bank reserves the right to change any of the terms or conditions at anytime'! Magnificent - why bother with any T&Cs if you have a catch-all 'we can do whatever we want at anytime' condition...
 
It really does appear that nothing has changed !!! To all reading this and whether customers of the named Bank in this case, please read all papers very thoroughly and if in doubt keep your money in your pocket.

It really is a very sad day, where after six years of Banks not conforming to the rules of a very serious Consumer Code, here we have a display where an Irish Bank chooses to try and deceive deposit holders.

To those that are effected by this lapse, it would be good guidance to report your grievance to the Regulator and Central Bank.
 
dub_nerd said:
I have a five year term deposit with Bank of Ireland Private, and while I went into it with my eyes open there are some conditions that could be considered sneaky. The term is 5 years 1 month, so it didn't have to be covered by the ELG. It can be closed after four years at the bank's discretion (presumably if they feel they can get a better rate elsewhere and no longer need your money). The C.A.R. was calculated and advertised incorrectly. I brought it to their attention and said it didn't meet CB guidelines. They said the C.A.R. was calculated as if interest paid out annually was reinvested at the same rate... even though you can't make additional deposits in the lifetime of the product!
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What did the CB say?
 
Response from Bank of Ireland on Boards.ie.

BoI are making changes. Some small progress in bold below.

Thanks for posting

The Special Term Account is a fixed term account to comply with the legislation governing Special Term Accounts. While the term is fixed, the rate cannot be fixed for the entire term as dictated by Section 264A (e) of the Taxes Consolidation Act, 1997 (as inserted by the Finance Act, 2001) which states "(e) there shall not be any agreement, arrangement or understanding in existence, whether express or implied, which influences or determines, or could influence or determine, the rate (other than an unspecified and variable rate) of interest which is paid or payable, in respect of the relevant deposit or relevant deposits held in the account, in or in respect of any period which is more than 12 months".

However, for customers who may be dissatisfied with the rate in Years 2 or 3, the Special Term Account may be closed, with no penalty from Bank of Ireland. However, the account will lose the Special Term Account status, which means that DIRT will be payable on the interest earned to that date.

(2) The product isunder the description "One option for such a lump sum deposit is a Fixed Term Deposit Account. It offers security for your money for the term chosen, with a fixed rate of interest". This is incorrect. The rate of interest is not fixed for the term. The real AER rate of interest is unknown when you choose your term and the rate of interest is not fixed for the full term.

You arec orrect in pointing this "categorisation" error out. While we do have fixed term products with variable rates, the Special Term Account is not and cannot be categorised as "an account for the term chosen, with a fixed rate of interest". Thank you for pointing this out - Bank of Ireland will immediately display this product under a different category to ensure there is no ambiguity.

(3) Theadvertisements that you have run for this product in the Sunday Business Post and Sunday Times yesterday failed to make the key T&C for this product clear. Why do the advertisements not clearly state that the rate of interest is not fully determined at account opening stage and the bank sets the rate for year 2 and year 3 at a rate of their choice? This is such an important criteria of the product. It should be made clear in the advertisements.

Because ofthe rate related restrictions prescribed by legislation, Bank of Ireland was restricted in publicising the rate on the advert as we would have been compelled to also state the AER, which, as you point out in your second comment, is 'unknown' as we cannot confirm the rates on Year 2 and 3. However, with best efforts, the advert was designed to highlight the core qualifying criteria for this account as required under the Consumer Protection Code. To qualify for a Special Term account, there is a minimum investment of €5K and customers must comply with the terms and conditions to benefit from the DIRT free exemption. The rate is not, in fact, a qualifying criteria.

(4) This whole product gives the feeling of entrapment. You lure the customer in with a high rate for year one and then pay them next to nothing for year 2 and year 3 but yet leave them locked for 3 years. It is trickery and entrapment. The Consumer Code has clear provisions against this kind of misleading product. I would encourage you to review this products compliance with the Consumer Code.

It isclearly not our intention nor is it our desire for customers to break out of the STA and as a consequence, it would make little sense for BOI to provide a year 2 rate that is adverse to prevailing market rates at this time. Bank of Ireland is meeting its obligations under the Consumer Protection Code, but is bound to adhere to the restrictions imposed on this account by specific legislation. However, as previously highlighted, customers who may be dissatisfied with the rate in Years 2 or 3, are fully entitled to remove their funds, with no penalty from Bank of Ireland, but they will lose the STA status.

The SpecialTerm Account 3 year product offers an opportunity for customers to receive interest of up to €480 per annum DIRT free, which Bank of Ireland determined may be a welcome incentive for savings particularly as DIRT rates have increased significantly over the past 5 years and as deposit interest rates reduce in line with market rates.

We hope this answers your query.

Thanks

Billy
 
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CiaranT, this is all very fine, but on a forum of not of any significant importance. These errors should be posted everywhere where the original advertisement was originally posted.

In the case of difference, it this had of occurred by a non-regulated financial entity or another smaller Financial Provider, there is a strong chance they would be barred or certainly restricted from trading in Ireland.

As with others. I would dearly love to know what stance the Central Bank takes of this ???
 
dub_nerd said:
I have a five year term deposit with Bank of Ireland Private, and while I went into it with my eyes open there are some conditions that could be considered sneaky. The term is 5 years 1 month, so it didn't have to be covered by the ELG. It can be closed after four years at the bank's discretion (presumably if they feel they can get a better rate elsewhere and no longer need your money). The C.A.R. was calculated and advertised incorrectly. I brought it to their attention and said it didn't meet CB guidelines. They said the C.A.R. was calculated as if interest paid out annually was reinvested at the same rate... even though you can't make additional deposits in the lifetime of the product!
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CiaranT said:
What did the CB say?
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I didn't report it to the CB, merely read their guidelines. I understood myself how the rates worked, however BOI presented them, so I wasn't too fussed at the time.
 
mercman said:
In the case of difference, it this had of occurred by a non-regulated financial entity or another smaller Financial Provider, there is a strong chance they would be barred or certainly restricted from trading in Ireland.
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Let's not go completely over the top.

Very few financial services providers have been barred or restricted. I would very much doubt that the description of this product would merit anything other than a "quiet word" from the CB to describe it properly.

They might tell BoI to write to all the customers who already have the product to highlight that the rate is not fixed in Years 2 and 3 and to give them the right to cancel the product.
 
But if not for CiaranT and AAM, this would have probably gone unnoticed and unchecked for some time. Not to commence a difference with you, but I do believe that providers barred or restricted in the main leave clients short of their funds. In this case the eventual outcome would have been similar.

And this was no mistake. It looks like a deliberate effort to portray a product which it simply wasn't.
 
orka said:
a 'lovely' letter back from BoI saying that the bank were in the right - see page 6 of the attached 10 pages of T&Cs - 'the bank reserves the right to change any of the terms or conditions at anytime'! Magnificent - why bother with any T&Cs if you have a catch-all 'we can do whatever we want at anytime' condition...
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Yikes to that. You cannot win any which way.
 
AIB have made a decision to pull their similar version of the BoI product for new customers.

AIB have closed their "Special Term" product today that offered a variable rate for a fixed period.

Good to see AIB make the right decision.

Meanwhile, BoI continue to advertise that their "Special Term" product, I saw a fresh advertisement for it today, as allowing no withdrawals during the term but yet BoI, as per the above, tell customers otherwise.
 
This warning re 3 year accounts has been on your Key post for a number of months. You warn to ask for the "growth" product.
 
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