Early Withdrawal Penalties to be Introduced

A state-owned investment savings provider, has announced changes to its range of fixed-rate bonds, which could see loyalty bonuses removed and the introduction of early withdrawal penalties.

Under the changes announced this week, the government backed provider has said that they are changing some of their terms and conditions in an effort to make their investment range more consistent and easy to understand.

As part of the changes being implemented from September 2012, new penalty arrangements will be introduced for the early encashment of the Children’s Bonus Bonds and Savings Certificates to bring them in line with other investments offered by the provider.

Part of the changes will see ninety days’ interest being deducted from the amount being cashed in, if customers cash their investment in before the end of the agreed term.

In addition, customers who cash in their index-linked savings certificates will miss out on the index-linking on their certificate for that year, even if only part of it is cashed in.

A spokesperson for the provider has said of the changes: “we have announced a number of changes to our fixed-term investments which will apply to investments renewed from 20 September 2012.

“None of these changes impact customers until the end of an investment term. Even then we believe the changes will be of limited impact for most people, and they need to take absolutely no action before they receive a maturity letter.”

They added: “We are working very hard to ensure that we provide clear and timely information, and when customers receive their maturity letters it will be important for them to familiarise themselves with the details of the changes.”

For those who are concerned what these changes will mean for their savings or for those who wish to discuss the best savings option for their personal needs and requirements, the financial services experts at Milsted Langdon will be able to assist.

Steve Horton is a Chartered Accountant and a Chartered Financial Planner who specialises in helping clients to manage their pensions and investments

Posted in News.