Why do Sainsbury’s Bank keep failing to pass on rate to me?

Sainsbury’s Bank still maintains a surreptitious savings interest rate practice. I have a Defined Access Saver and an interest rate of 3.6 percent.

When I called I was not given the benefit of the current advertised interest rate for this account which is 4.21 percent unless I close the existing account and transfer the money to a new account.

Reluctantly I have now done this, but it is such an annoying unfriendly practice. Why are they doing it? Via email.

Ed Magnus, from This is Money, replies: For savers there is nothing more annoying than their bank rewarding new customers with newly advertised higher rates, while they get a lower rate.

Some banks do this by issuing different versions of the same account.

They create a new number with a new rate, leaving those who have already signed up for the previous number from the same account to keep the previous rate.

Sainsbury’s Bank’s current issue of hair Defined access saver is number 46. The previous one was number 44 and paid 4 percent and before that it was number 42, which paid 3.76 percent.

Banks will argue that it is easy for their existing depositors to change their account to a higher rate. But this seems like both bad practice and a faff for savers.

Sainsbury’s terms and conditions allow depositors to have only one open Defined Access Saver account per issue, and that the issue number will change if it changes the interest rate or other product features.

This means that the interest rate of a previous issue will not necessarily change automatically to match the latest rates.

The process for existing customers to take advantage of a new rate varies depending on the product.

For example, the cash Isa customers can only have one variable Isa product, so they must contact the bank by phone or via a secure message in online banking to have their rates updated to the current retail rates.

Coincidentally, another dissatisfied Sainsbury’s customer also contacted us regarding this matter.

They said: ‘I currently have an ongoing complaint with Sainsbury’s Bank about their floating rate Isa product.

“I was told nothing would change because it was company policy so I was treated like it was just feedback.

‘I was told it is in the terms and conditions that customers must call to ask…’beg’ for the new rate when it is increased. I request this in writing but was told that is not the case.

“I was not aware of this and do not see it in the small print. I do not bank online.

Coincidentally, I found out about this when I spoke to the bank to ask why the requested statement had not arrived.

“I saw interest rates were high on the website so I asked if the bill had been adjusted…then I was told that only if I asked would the interest be changed.

So I asked, but was then told it would only be increased from the time I asked, not from the time they increased the rate. I was speechless with the arrogance.’

As for Sainbury’s Bank’s Defined Access Saver, customers who have had previous spend will need to open a new account online with the last spend or by phone and then transfer funds to the new account.

It says existing customers can also take advantage of new rates through its website, which it says is designed to make it even easier for customers to open or transfer existing accounts.

When we contacted Sainsbury’s Bank about this, a spokesperson for the bank simply replied: ‘We are constantly monitoring the market to ensure we offer our customers a competitive range of savings products.

“If we change our interest rates, we will contact affected customers to notify them and post any changes, including new rates, on our website.”

We’ve reported on this sneaky tactic before, where variable interest was seemingly non-variable.

Last summer, some savers were paid 0.3 per cent and did not receive an automatic raise from Sainsbury’s.

And in March, with our sister title Money Mail, we highlighted how Sainsbury’s was the bank that won’t pass on rate hikes unless you call and ask.

Is this common?

James Blower replies: Unfortunately, yes, Sainsbury’s are not alone, although they seem to be making it much harder than other banks.

Cynergy Bank is also doing something similar and several depositors have contacted us asking if we can highlight those who practice this type of practice, as well as those who only pass on rate hikes to new customers.

It’s a tricky thing to do, as some banks choose to pass on interest rate increases in some cases and not in others, so it’s not always clear if there’s a ‘policy’.

The ‘issue’ providers are the ones to watch. For example, Secure Trust pays 4.3 percent on number 8, but only number 7 enjoys the same rate.

On the other hand, Aldermore and Shawbrook are examples of two banks that are often good at passing rate hikes on to their previous issues.

Our advice to savers is to look at those who offer a simple entry fee that all customers – existing and new – get, so they don’t have to worry about this situation happening.