Interest rate debate

August 16, 2017

Key Learnings:

Refer to your account agreement to ensure you have the correct interest rate and relevant information. If something seems too good to be true, it probably is.

Ms. L opened both a chequing account and a savings account with her bank. During a call with the customer contact centre, she asked whether the savings account interest rate of 1.25% was monthly or annual. The representative said Ms. L would receive 1.25% per month (which is equal to over 16% per year). Later that same month, Mrs. L contacted the centre again and asked another representative to confirm the interest rate on the savings account, and she then learned that the interest rate was in fact 1.25% per annum.

Ms. L’s complaint was that she relied on the information from the first call and that her bank should have honoured the rate of 1.25% per month going forward or for at least six months.

The bank said that the correct interest rate was disclosed on the account agreement, which Ms. L acknowledged receiving when the account was opened. The bank apologized for the incorrect information provided over the phone and offered Ms. L $125 as a goodwill gesture.

In our investigation, we verified the information provided by both Ms. L and the bank, and from this analysis it was clear the bank representative gave Ms. L incorrect information. However, the representative’s mistake did not create an obligation for that bank to provide Ms. L with an ongoing rate of 1.25% per month. We calculated that the 1.25% monthly interest on Ms. L’s balance for the initial period where she was unaware of the correct interest rate was approximately $50 and, therefore, we found that the $125 the bank had originally offered was reasonable in the circumstances.

In general, OBSI’s recommendations for compensation are intended to restore a consumer’s financial position to where it would have been if it not for the error. In this case, the bank investigated the complaint, acknowledged the error and offered an amount that OBSI believes fairly compensated Ms. L for her losses related to the incorrect information and for any distress and inconvenience she may have experienced. We spoke to the bank and they agreed to extend the original offer.

This complaint was partially upheld.

(2016)