tax exempt special savings accounts (TESSAs)

Regular readers of ombudsman news will know that, over the past year, we have received thousands of enquiries from customers who were unhappy with the interest paid on their TESSAs. In September 2000 we published a briefing note that was intended to help firms and their customers resolve these complaints – by indicating the approach we were likely to take on complaints that reached us.

what has happened since then?
It is clear that firms looked at our briefing note very carefully, even though many disagreed with our approach. Some firms continued to argue that TESSAs were not superseded accounts for the purposes of the Banking Code, even though the Banking Code Standards Board said they were.

Some banks that, in the light of our briefing note, considered that they were likely to ‘lose’, settled individual complaints with their customers. Others that considered, in the light of our briefing note, that they were likely to ‘win’, asked us to adjudicate.

Because of the numbers involved, we grouped similar cases and chose representative ‘test cases’ for investigation. We made sure we covered all the options – seven in the case of one bank. In the test cases that have been decided so far, all those banks have indeed all ‘won’ – although we have more test cases to go. Things are a bit different for building societies. Fewer of them settled individual complaints following our briefing note, preferring us to investigate. Some said that the stakes were higher for them. They were smaller than banks, so the financial impact would be greater. And, as mutual organisations, they would also have to consider how to treat TESSA holders who had not complained.

Again, because of the numbers involved, we grouped similar cases and chose representative ‘test cases’ for investigation. Two societies ‘won’ at the preliminary conclusions stage. Two ‘lost’ at the preliminary conclusions stage and decided to settle. Seven ‘lost’ at the preliminary conclusions stage and ‘appealed’ to the ombudsman. Four of those have reached the ombudsman’s final decision stage so far – one ‘won’ and three ‘lost’.

One society ‘won’ on one of its range of TESSAs. Its press release about its ‘win’ was misinterpreted by some as indicating that it had ‘won’ in relation to all its TESSAs. In fact, we have yet to reach a final decision on the others.