‘My financial history goes back TOO far’: How being loyal to the same bank for 20 years could lock you out of a top fixed-rate savings deal
- Wrexham-based online-only bank SmartSave offered a best buy 1.66%
- One applicant was stopped from applying as their bank account was too old
- Accounts opened before 1998 are not governed by rules which require data to be shared with reference agencies – so accounts may be unable to be ID’ed
Savers who have held the same bank account for more than 20 years could find themselves locked out of top savings deals, because their bank refuses to allow applicants to verify their details.
SmartSave, a Wrexham-based challenger bank, previously offered a 1.66 per cent one-year fixed-rate savings deal, the best buy in This is Money’s tables and crucially comes with Financial Services Compensation Scheme protection.
It cut the rate on Monday to 1.55 per cent, but this still places it joint-sixth in our tables, with a rate just 0.05 percentage points lower than the top provider.
But at the time it offered the best one-year tie-up on the market, one customer who had been with a major high street bank for more than two decades was left unable to access its fixed-rate deals, as the bank couldn’t verify his account.
Locked out: Customers who have bank accounts opened before 1998 could be prevented from applying for top savings deals with one new bank
They wrote on social media platform Twitter: ‘I tried to open a fixed savings account with SmartSave but was refused because my bank account was opened before 1998.
‘Interesting to have a financial history that goes back too far.’
Some bank accounts opened before 1998 are not governed by rules which require banks to report customer details to credit reference agencies, which allows other banks to verify applicants for savings accounts online.
Most newer savings banks, which tend to offer the best rates for customers, will verify customers online but if they can’t they often ask prospective applicants to send a signed bank statement to confirm their ID.
This is also the case when you want to change a ‘nominated’ account linked to your savings account, which is the bank account you withdraw money to.
However, SmartSave – owned by Chetwood Financial – offers no alternative way for those who have stuck with their current account provider to verify themselves, meaning they cannot apply.
It meant the customer, who tweeted their frustration on 23 January, was effectively locked out of applying for the highest-paying one-year deal on the market.
They said in a reply to SmartSave: ‘I don’t think I suggested details shouldn’t be verified.
‘My problem is that your process seemingly doesn’t include a bank ubiquitous on every high street.’
While SmartSave on the Frequently Asked Questions section of its website addresses the question of ‘why can’t you verify my bank account’ by explaining you may be unable to apply if you hold a bank account opened before 1998, the issue is not mentioned on its account summary page.
Instead, it simply says: ‘You can open and manage the account online at www.smartsavebank.co.uk’.
James Blower, industry expert and founder of the website The Savings Guru, said this was the only example he’d seen of a bank which provided no alternative way of verification for those locked out, and described it as a ‘punishment for loyalty’.
It is ironic given that savers who hold bank accounts with the biggest UK banks have long been encouraged to shop around and take advantage of smaller providers offering better rates.
Julia McColl, commercial director at Chetwood Financial, said: ‘As a digital bank, we use digital methods to validate that our customers are who they say they are.
‘This is a conscious choice to keep costs low so that we can offer the best rates for customers who want to take products out and service them online.
‘Unfortunately that does mean some customers won’t be able to open a SmartSave account, depending on who they bank with.
‘It’s a common problem in the industry and we’d welcome more support from the established banks to increase the number of consented accounts.
‘At Chetwood, we value all feedback from customers and are working hard to welcome even more customers to SmartSave.’
THIS IS MONEY’S FIVE OF THE BEST SAVINGS DEALS