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Some background:
Our two kids have a ‘Headstart’ savings accounts with Virgin Money (Clydesdale bank). The terms of this account states that it needs to be managed in branch when making withdrawals. Virgin wrote to me to advise that it was closing your local branch (in Guildford) and when I looked into it, I discovered that they’re also shutting every single other branch in the southeast of England, including London. This means that in order to make a withdrawal, we would need to travel to the East Midlands which equates to a four-hour trip. This account pays interest at the BoE base rate +1%, so there’s nothing even closely comparable we could switch to and earn the same level of return.
I asked Virgin to change the terms of the account to allow us to make withdrawals through some other means and allow the account to remain open but they declined to do so, so I made a complaint to the ombudsman who’ve just come back to say:
“It is not the role of our service to recommend how a business should conduct or arrange its commercial operations and processes, as that is for its own determination. It is also not part of our role to require a business to alter its procedures or make it improve the level of the service it offers its consumers. That is the role of the regulator – the Financial Conduct Authority (FCA).
Virgin have explained that it made the difficult decision to close a number of its branches/stores. And so, whilst I appreciate your frustrations with this, this does not mean that Virgin have done something wrong, as it’s a matter of commercial judgement on the part of Virgin to determine what services and products it offers – and under what terms. We wouldn’t look to intervene with this.
Therefore, if the account is no longer suitable for your banking needs, I can see that Virgin have advised you to visit your local branch before its closure to access the funds held in your children’s accounts.”
My options remaining appear to be to ask the Ombudsman to ‘make a final decision on the complaint’ meaning I must provide any further evidence or representations by the end of next week (or ask for more time).
Interested to hear if people like @JDB think I would have grounds to do so, or if there are any other avenues available such as raising a complaint via the FCA. Any advice welcomed.
I know nothing about the account – is it a fixed term one, or something like that? Or just easy access/ no-term? If you’ve signed up for something for X years and the company has now made it impossible for you to use it then I think you could sculpt a complaint that might have some traction.
If it’s just (essentially) an easy access savings account then I think the FCA will stick with their judgement – it’s annoying but Virgin are allowed to close branches. Even if it is fixed term in some way I wouldn’t be confident of success.
I know nothing about the account – is it a fixed term one, or something like that? Or just easy access/ no-term? If you’ve signed up for something for X years and the company has now made it impossible for you to use it then I think you could sculpt a complaint that might have some traction.
If it’s just (essentially) an easy access savings account then I think the FCA will stick with their judgement – it’s annoying but Virgin are allowed to close branches. Even if it is fixed term in some way I wouldn’t be confident of success.
No, not fixed term, just a one-month notice for withdrawals. The part that feels a little off is that in effect they’re forcing us to close the account because it won’t be manageable without a local branch, when they could easily allow us to maintain it if we could operate it online or even by post
As long as Virgin has given you good notice of the move as well as an option of closing or changing the account then I think you’ll struggle.
If it hasn’t then arguably Outcome 6 of TCF would come into play ie not imposing unreasonable post-sale barriers. But it doesn’t sound like this has been the case?
https://www.fca.org.uk/firms/fair-treatment-customersAs you note, @JDB’s opinion will be informative here.
The ombudsman can’t change the terms of a product for sale, which by asking for it to be operable via post or any other form other than in branch is what you are asking for.
Nothing to be done IMHO, you’ll need to move your affairs to a bank or account type in keeping with your needs.
I mean come on. You can get a 4.5% Kids easy access account pretty easily. You can get a tax-free cash ISA paying similar interest too.
Unless this account has a 6 or 7 figure amount in it, I think wasting the Ombdusman’s time is a little bit cheeky.@stantheman across the two accounts it is in 6 figures so over the long-term (the intent is for them to be able to access it when they reach adulthood) this is a material amount of lost interest
I’d agree that it’s poor service, and a lesson in how to alienate several potential customers for life. Not a surprise for this banking group who do seem spectacularly incompetent in many ways.
I’d also agree that there isn’t really a remedy here; Outcome 6 in FTC does not assist you as the barrier imposed here is not related to the ones defined there. If the bank is determined to follow existing rules a bit pigheadedly with no common sense or flexibility, and annoy customers in the process, that may be foolish, for any business, but on its own is not a breach of any regulation I can think of.
As your complaint is ultimately about branch closures and branches no longer being available in your area, which is a commercial decision and something banks are allowed to do, I don’t see that you have any remedy. Realisticially I would think that the FCA isn’t going to assist either – they will have had infinite complaints around the subject of bank closures and the inconvenience caused, to the point they probably have a dedicated printing and mail handling line churning out boilerplate replies.
Unfortunately the investigator’s decision is accurate but they are effectively powerless to remedy the unfairness. If you were to ask for a final Ombudsman decision I think you might need to reframe your argument to show that Virgin’s branch closure decision, while one they are entitled to make, was done in an unfair manner that has occasioned actual financial loss. The nature of the account and probably the marketing documents mean that it is intended to be a long term product (hence the high interest rate) and the compounded interest was an important element of the sales pitch and to expect you to travel to the East Midlands is wholly unreasonable. Essentially, you need to steer the argument away from the branch closures to the account closure which was really quite gratuitous since they could, as you say, have allowed the account to be managed online or by post. You would then need to quantify the cost. It really is a long shot, but I can’t think of any other approach.
I would also consider writing to one of the non-executive directors; I wonder if they appreciate the effect of the closures and how execution of such closures has failed to deal with many customers appropriately.
Their website advises some transactions can be made at Post Offices.
Thanks Squirrel. I feared that may be the case.
Frustrating, but I feared this would be the outcome when the bank responded in the way they did – they have no interest in keeping us as customers which seems ludicrous given the amount of capital which is on deposit but I will just have to move it elsewhere
Their website advises some transactions can be made at Post Offices.
Not for this type of account, unfortunately
Unfortunately the investigator’s decision is accurate but they are effectively powerless to remedy the unfairness. If you were to ask for a final Ombudsman decision I think you might need to reframe your argument to show that Virgin’s branch closure decision, while one they are entitled to make, was done in an unfair manner that has occasioned actual financial loss. The nature of the account and probably the marketing documents mean that it is intended to be a long term product (hence the high interest rate) and the compounded interest was an important element of the sales pitch and to expect you to travel to the East Midlands is wholly unreasonable. Essentially, you need to steer the argument away from the branch closures to the account closure which was really quite gratuitous since they could, as you say, have allowed the account to be managed online or by post. You would then need to quantify the cost. It really is a long shot, but I can’t think of any other approach.
I would also consider writing to one of the non-executive directors; I wonder if they appreciate the effect of the closures and how execution of such closures has failed to deal with many customers appropriately.
Thanks for the helpful advice @JDB, I shall give both avenues a shot
I would like to second the incompetence of Virgin Money, in particular the credit card operation.
@stantheman across the two accounts it is in 6 figures so over the long-term (the intent is for them to be able to access it when they reach adulthood) this is a material amount of lost interest
In that case, go and buy them some low coupon Gilts instead – eg 1% 2032, current YTM 4.4% ish Each £100,000 of that would only generate £1,000 of taxable income a year, while the vast bulk of the return would be capital gains – which on Gilts are all tax free.
When I had a kids account as soon as I could I was taking money out of it. 😀
Maybe a good thing that’s its made more difficult by Virgin!@stantheman across the two accounts it is in 6 figures so over the long-term (the intent is for them to be able to access it when they reach adulthood) this is a material amount of lost interest
Large sum and intended for the long term…. Maybe having to visit the East Midlands once in 18 years is worth it for your use case?
Well it is unfair, you reasonably assumed that withdrawal would not be an issue when you opened the account, however I guess they never said in the T&C that there would always be a branch close to you.
They definitely are not going to change a branch only account to an online access account.
If you can lodge remotely, and it is only withdrawals that is an issue, then given you’ve said
“(the intent is for them to be able to access it when they reach adulthood) ”Is this a real ballache ?, as it appears you don’t anticipate having any withdrawals for quite a while. And when it comes time for them to have access, I bet they don’t mind having to travel a few hrs to close the account and move their 6 figure sums to somewhere move convenient 🙂
That does rather assume that they make no further branch closures, which I would think is rather likely given the current approach of theirs (and most other banks). Whilst the vast bulk of the account will indeed remain intact, there will on occasion be times when they need to access the funds to make some small withdrawals as they get older (let’s assume maybe once or twice a year). If for example that required a biannual trip to Newcastle, that to me feels somewhat of an inconvenience to access their own money, even if several of you feel like it’s acceptable.
@Olly unfortunately the realist needs to kick in. It is what it is at this stage.
Ombudsman can do nothing, Virgin for now aren’t changing (that stance may change in a few years of they keep closing branches, but your complaint won’t be the driver). Whilst it doesn’t fit what you wanted you now need to decide if the extra interest on this account warrants the new unexpected, level of hassle. Doesn’t make it right, but that’s where you are.
Presumably given the timings the branch was shut before 31 July 2023? That was when Consumer Duty kicked in and there were a raft of bank closures just before that. The Government/FCA are also mandating access to cash as part of the Edinburgh reforms, perhaps too late to help in your case.
I do agree with other posters that as a savings account, if it does have a very large sum it’s not the end of the world to visit a branch well away from your home once before they get to 18. However, with a large pinch of salt, you may get some joy by asking Virgin to look again at the accounts under the Consumer Duty principles, which requires existing products to continue to provide ‘fair value’, and closed products to do so if they remain open after July 2024. It’s more than arguable that a four hour round trip to make a withdrawal isn’t providing fair value, and you might get them to look again at if there is an alternative method of withdrawal.
I don’t however think you’ll get any further joy from the ombudsman based on the way the complaint is framed, you will need a new argument to give yourself any chance and if I read it correctly, the accounts haven’t actually been closed?
Thanks Nigel. The branch will close on the 14th November so I’ll be sure to raise the Consumer Duty principles with the bank.
Like many of you I don’t hold out much hope of success but if that transpires to be the case I’ll bite the bullet and move the money elsewhere.
Sadly it seems that in your case you opened an account with awkward terms, but acceptable for the benefits, you when you applied.
Those benefits are now outweighed by the negatives.
Thinking a little left field here. You say that withdrawals may be required 1-2x a year. Why not leave that account alone to accrue interest, not adding anything (if that’s allowed by the terms) and open a new account with easier access for any new deposits. You then have the long term higher interest on the large lump sum and short term access on a smaller amount?
I think that in the same circumstances I might also feel aggrieved at the newly restrictive limitations created by the unintended consequences of two legitimate bank prerogatives to set product terms and to open and close branches within regulatory tramlines.
But if I could, I would keep the account open with an eye on further developments.
The branch closure discussion is only likely to become more sophisticated over time, especially if real examples of indirect discrimination result, like an elderly demographic being disproportionately affected.
If banks pursue relentless branch closures then sooner or later the TCF aspect of “branch only operated” accounts will come under very public scrutiny.
Closing the account when you can afford to wait it out is like resigning when your employer starts indicating that you’re surplus to requirements and letting them off the hook of having to offer you a reasonable leaving settlement.
I also think your (future) case is strengthened if Virgin persists in refusing to compromise on allowing alternative avenues of access to the account. Banks can’t reasonably have it both ways of forcing profitable internet-only accounts onto customers while retaining loss-making products on a dwindling “branch-only” access basis.
Have you considered writing to BBC Watchdog or Martin Lewis Money show or similar ?
You could be in the vanguard of a growing contingent of similarly affected customers.
Thanks Nigel. The branch will close on the 14th November so I’ll be sure to raise the Consumer Duty principles with the bank.
Like many of you I don’t hold out much hope of success but if that transpires to be the case I’ll bite the bullet and move the money elsewhere.
If the branch closes on 14 November where will you have to travel to to close the account at a later date?
I think I’d be taking the money out ASAP. Why let Virgin Money have the continued use of your 6 figure sum when they make it difficult for you to withdraw it?
Why don’t you open a GIA and invest the money in the stockmarket? It’s likely to make more in the long term which is what you’re after. And open a stocks and shares Junior ISA account for each child and transfer the maximum £9k into each JISA each year. The only caveat with a JISA is that no-one can access the money until they are 18.
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