Why you can claim if you aren’t told about a rate cut

A SAVER has won compensation from a building society after it failed to inform them of a rate cut, in the first case of its kind.

A report by the financial ombudsman, revealed that the building society had not told their customer of the change in rate because it deemed the cut to be small. Banks can do this if a reduction is not considered ‘material’ — in practice, this means 0.25 pc.

However, the customer argued that though the rate change was small in the eyes of the provider, it was significant to them as they held £50,000 in the account.

They said they would have switched to a better deal had they known of the cut. The saver had held the account for 20 years, but the interest had reduced considerably in the past two.

When the customer complained, the building society replied that rates were on its website. It said all customers had been sent a letter informing them this is where rates would be published and that the cuts made were sufficiently small that it did not have to inform them personally. But the saver did not have a computer.

They moved the money immediately they learned of the rate reduction, and ended up taking their case to the financial ombudsman. It upheld their case, saying the size of the balance was relevant, not just the amount of the rate cut.

A spokesman for the ombudsman, which did not name the building society, said the ruling was meant to send a signal to other institutions. He added: ‘The phrase “material changes” is ambiguous. What isn’t significant to a provider is to the customer.’