There are many complaints about so called obsolete or superseded deposit accounts which offer lower interest than similar accounts which are being actively promoted.

Is this allowed? Unfortunately yes, but if you do have one of these old accounts there are things you can do:

• Complain - which is what this page talks about; and
   
• Move the account.

The Banking Code is wishy washy about old accounts. It says:

From time to time, we offer new savings and investments accounts. If you have any type of savings and investment account, other than a fixed rate account, which has been ‘superseded’ because:

• new accounts are no longer opened;
   
• or the account is not actively promoted;

we will either
 
(a) keep the interest rate on the superseded account at the same level as an account with similar features from the current range; or:
 
(b) switch the superseded account to an account with similar features from the current range.
Examples of similar features include notice periods, types of withdrawals, numbers of free withdrawals, how deposits and withdrawals from the account are made. This means that the interest rate on your account will always be at least as good as the interest rate on an account with similar features from the current range.

Where there is no account with ‘similar features’ we will, within 30 days of your account becoming superseded, contact you to:

• tell you that the account is superseded;
   
• tell you about our other accounts;
   
• and help you switch accounts without any notice period and without any additional charges.

The Banking Code is supervised by the Banking Code Standards Board. But the code says only that the rate on the superseded account must be the same level as "an account with similar features from the current range".

So there may be two similar accounts - one the current headline grabber with an excellent rate, and the other a mediocre account which is not usually offered but is technically "available" ... and no prizes for guessing which account the bank or building society will choose for the interest rate on its obsolete account.

The Sunday Times claims there are many obsolete accounts where the Banking Code is not being observed. It encourages readers to contact the Building Society Ombudsman (020 7931 0044) or the Banking Ombudsman (020 7404 9944).

This may cause the regulators to strengthen their guidance to the industry, but in practice individual complainants will doubtless be referred to their savings institution to obtain a letter of deadlock. More about the complaining process here.

You can

• Quote the interest rate on a similar headline grabbing account they are offering - if you don't know it, check their web site or ring a branch you don't bank with and say you are a potential new customer;
   
• Quote the Banking Code (see above)
   
• Ask them to pay you the difference in interest rates.

If there is another account in their range which they are comparing your account with, leave it to them to tell you what it is - you don't have to do all the research!

If you do complain, please tell me the outcome, so that others can benefit from your experience.

September 2000 - A new ruling from The Banking Code Standards Board. Where rates paid on Tessas are lower than those for comparable accounts, there must be no penalty for transferring them elsewhere. The Board recommends there should be no transfer penalties on Tessas at all, but it cannot make this a requirement as it would go beyond the (new but still feeble) Banking Code.

Note ...

The Sunday Times calls the Banking Code "weedy" and says it "is allowing banks to get away with murder by stashing billions of pounds in accounts that pay interest at less than the rate of inflation, while launching new accounts with high rates to attract new customers".
I agree with this criticism.

But it goes on to say: "The mighty code says that when an account is rendered obsolete ... the interest rate should be maintained at the same level as that on the best paying comparable 'live' account". But as you, our readers, can see from the Banking Code extract above, it is not the "best paying" comparable account they have to align it to.

This would have been just and this is why the banks would never have signed up to it. If they had been forced to accept this, they would then just have nitpicked about what was "comparable".

The Head of the Banking Code Standards Board says:

I would prefer that banks and building societies did not have any obsolete accounts. I think they could do a lot more to tidy up the situation.

Their shareholders might not be pleased, though.