Bank not required to provide direct notice of changes to savings account interest rates

Categories:

Advice & information, Bank accounts, Fees, charges & rates,

Summary:

In November 2004, Alejandro opened a variable-rate savings account. He opened another account of the same type in September 2012. At that time, the interest rate was 3 per cent. Twelve years later, the bank changed both accounts to different savings accounts after it stopped offering the original account type.
In 2026, Alejandro noticed that the interest rate had fallen to 0.10 per cent and complained that the bank had failed to clearly and directly notify him of the changing rate. He said a 0.10 per cent rate was so low that it was misleading to still describe it as a savings account.

Published:

September 2026

Alejandro also said that, when the bank changed his accounts, it quietly removed a withdrawal restriction which justified a higher interest rate. Alejandro sought compensation for interest he said he could have earned elsewhere.

Our investigation

The variable-rate savings accounts offered by the bank were designed to allow customers to deposit and withdraw funds while earning the interest rate that applied at that time. While Alejandro may have preferred for the bank to notify him directly when the interest rate changed, there is no requirement for a bank to notify a customer directly whenever the interest rate on a variable-rate savings account changes.

We examined the terms and conditions applicable to the savings accounts both before and after the change. The bank was entitled to change interest rates without prior notice, and to communicate changes through account statements, its website, branches, public notices, or other electronic banking channels. Initially, Alejandro could view the applicable interest rate on six-monthly statements. After the accounts were changed, rates were no longer included on statements but Alejandro could view the rate in his internet banking, mobile app, and on the bank’s website. In each location, the bank said that rates could change. We found the bank had communicated the rates in accordance with the relevant terms and conditions and met its obligations to clearly and effectively communicate with Alejandro.

The bank notified Alejandro by email that his savings accounts would be changed to a different type of variable-rate savings account. The new accounts operated in much the same way as the previous accounts and, at the time of the change, earned a higher interest rate. Although Alejandro believed a withdrawal restriction applied to the savings accounts he opened in 2004 and 2012, no such restriction had ever existed. Finally, we found that describing the account as a savings account was not misleading simply because it sometimes paid a low interest rate.