Post Office promises angry savers: 'No one will lose out'

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http://www.guardian.co.uk/money/2008/de ... ost-office

The Post Office has agreed to compensate savers who were frozen out of a 7%-plus bond offer following administration problems, it emerged this week.

Some who sent in cheques had them returned months later without interest. And a number of Guardian Money readers were told their applications had been turned down on identity grounds when they had complied with all the Post Office's demands.

One south-west London reader, who saw publicity for its People's Growth Bond in early August, was so impressed by the fixed 7.05% rate guaranteed for a year, he invested £50,000.

Or rather, he tried to invest £50,000. He took his personal cheque to the local post office, and was given a receipt which included his home address. But, nearly three-and-a-half months later in mid-November, Post Office Savings wrote to say: "Thank you for applying for a Post Office Growth Bond. Unfortunately, we are unable to process your application at the this present time.

"To comply with our legal duties, we are obliged to confirm your identity and permanent address before we can open an account. We have tried to contact you by phone and post without success."

He says: "They never wrote to me. But worse, I have lost around £1,000 in interest because the Post Office just put the money back into my current account. And there is nowhere now offering 7% or anything close, so I have lost out again."

West London reader Martin Bradshaw, who wanted to invest £500 in a later issue of the bond paying 6.75%, was initially told on an undated letter that "we are currently receiving an unprecedented number of applications. As a result it is likely to take us longer to process and send your paperwork than we would like".

But this was followed by the same rejection letter the first reader received - dated November 10.

"I have lived at the same address since 1976. I produced documentation from Nationwide, a hospital and National Savings & Investments. They ignored the lot, even though my application form was scrutinised and checked online at the post office counter.

"I find it hard to believe it attempted to contact me either by phone or letter," he says.

And a Stockport reader says his application was rejected, even though he used the same documentation on the same day to invest in Birmingham Midshires.

But the Post Office, whose savings arm is a joint venture with Bank of Ireland (providing administration and part of the no-limit Irish government compensation scheme) now concedes it should have accepted the applications.

Richard Norman, Post Office director of savings and investments, says: "We would like to apologise to those customers who have experienced delays with their investments. We've had a tremendous response but the backlog has been cleared. We are determined to ensure no saver loses out, and we shall pay backdated interest."

The London reader who tried to invest £50,000 will get the rate backdated to early August - and he will also enjoy a full year at the now impossible-to-find 7.05% interest rate.