Grand Finale

By SYLVIA MORRIS, THIS IS MONEY AND DAILY MAIL SAVINGS EXPERT
Updated: 19:00 EST, 27 August 2003

AFTER more than three years of waiting, savers in Skipton Building Society's Finale Tessa account are finally in line for compensation.

A decision by the Financial Ombudsman last month said the society had treated these savers unfairly compared with its Isa savers.

The Tessa Finale was on sale from January 20, 1999, until April 5, 1999. The Ombudsman ruled that these savers suffered harsher terms and conditions than those in similar accounts with the society. But they did not earn a higher rate of interest to compensate. It's another victory for Money Mail's Fair Play For Tessas campaign, launched on February 16, 2000, which has helped tens of thousands of Tessa savers to get compensation.

Tessas are deposit accounts which pay tax-free interest as long as money is left untouched for five years.

They were replaced in April 1999 by cash mini Isas, which allow easy access to savings. Tessas became obsolete and under the Banking Code at the time, banks and building societies should have paid interest at least equal to that of accounts with less onerous conditions.

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But Isa savers can withdraw money from their account on 30 days' notice and a £30 fee. Isa savers earned a higher rate than Tessa savers during part of the crucial period of April 1999 to September 2000, even though they could withdraw cash while Tessa savers could not. Skipton agreed to pay a £30 inconvenience fee plus interest of £17.21.

Mr Peters, 66, says: 'Our persistence has paid off. It is not just the payout that was important, it was also the principle. We felt that the Skipton had treated us unfairly.'

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Most banks and building societies were paying more on easy-access cash Isas than on Tessas, which tie up money for five years.

In September 2000, the Ombudsman agreed with Money Mail, saying banks and building societies should have paid a fair rate of interest, comparable with those on accounts with less onerous conditions.

Failing this, they should have written to savers within 30 days of April 6, 1999, to tell them that the account was obsolete and allow them to transfer out without notice, penalty or any fee.

But many banks and building societies dug in their heels, and customers were forced to take their fight to the Ombudsman.

When the Ombudsman makes a ruling on a particular case, the bank or building society has to compensate only that customer. The Ombudsman's office can encourage them to pay out on all identical cases sitting in the queue.

The building society or bank can also apply this decision to other savers who have not been to the Ombudsman - but he has no power to make them do so.

John Dawson, secretary and general manager of the Skipton, says: 'We are disappointed with the decision. We still believe the Tessa had less onerous conditions than our Isa, but we will pay out those who have gone to the Ombudsman.'