My fixed rate Abbey bond was due for maturity on the 1st of August 2008, and I received paper work before hand that gave me a form with the options of either re-investing with the abbey or for the funds to be transferred on maturity into another abbey account.

However the form did not contain a section that would allow me to transfer the funds out of the Abbey to another institution on maturity. In this regard there was a brief section at the beginning of the form that stated that I would need to visit an Abbey branch before maturity to make such arrangements.

Abbey Branch

On visiting the Abbey branch I was informed that no such procedures exist to handle instructions before maturity and that if I closed the account before maturity I would lose interest and that they could not take instructions for post maturity closures before the bond has matured.

Written instructions to the Abbey

As is the normal practice, I wrote to the Abbey requesting that the funds be transferred to my current account or a cheque posted to me on maturity, having waited nearly 2 weeks after maturity and nothing having arrived either by post or bank transfer I decided to pay the branch a visit as clearly the Abbey had ignored my written instructions.

Abbey Account Closure and Loss of Interest

I visited the local branch on the 12th of August and I instructed the staff to close the account and had a cheque drawn on the day. However, I noticed that the Abbey had not credited the account with interest for the 11 days since maturity, which I queried with the staff and was told that interest is only payable for whole months, therefore to get any of the interest paid at a low interest rate I would have had to hold off on account closure until he start of the following month.

Abbey Fixed Rate Bond Conclusions

Savers not intending on reinvesting should visit the branch on the day of maturity or day after to close the account and have a cheque drawn.
Sending written instructions that do not entail reinvestment with the Abbey is a waste of time.

My usual experience with maturing bonds with other financial institutions is that they will -

a. Acknowledge my written instructions

b. Credit the maturity value with any accrued interest for extra days beyond maturity.

By Shahla Walayat
http://www.moneyforums.co.uk

Moneyforums.co.uk is a FREE site which provides UK Money Saving Guides, Tools and Forums including - Credit Score Calculator and the Savings Calculator . Mortgage and Tax Calculators. Money Saving Guides such as Credit Card Stoozing , Savings Tree , Money Saving Guide. Personal Finance Discussion Forums open to ALL, supported by experienced moderators, to discuss any personal finance topics from The best Savings & Deposit Accounts , Regular Savers and Cash ISA's and more.

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Shahla Walayat Archive

Comments

nmn
02 Jan 09, 13:17

Abbey Having Problems In Repaying Maturing Bonds Jan 09

ABBEY HAVING PROBLEMS IN REPAYING MATURING BONDS

In Dec07/Jan 08 Abbey issued bonds paying 7.1% apr.

They had huge amount of demand for this bond and at that time they could not cope with the demand and the service provided then was awful

Now ( on 1st Jan 09 ) these bonds have matured and it seems that ABBEY are having lots of problems in paying back the customers. The reason they are quoting in "IT Glitch !"

Is the real reason that they do not have sufficient funds to pay back !

Is anyone else experiencing this problem and what are they doing about it

Nadeem_Walayat
02 Jan 09, 13:54

Financial Insitutions in Distress

All financial institutions are short of cash since August 2007, which is why you could pick up 7.1% in Jan 08, and why despite Octobers rate cut you could still get 7% for a shortwhile afterwards !

Expect all financial instutions to try their hardest to hang onto your valuable cash. However what the banks should be doing is PAYING HIGHER interest rates. Forget the base rate, the real economic interest rate is still north of 4%.(though falling fast).

Back to Abbey, it is not in Abbeys interests to stop you from accessing your maturing funds, yes they can delay for a few days, but any longer and they would risk loss of confidence so you should not unduly worry as Abbey have no choice but to repay the maturing bond, as the alternative .......

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