Norwich and Peterborough is taking the Financial Ombudsman to the High Court in a test case which wi...
Norwich and Peterborough is taking the Financial Ombudsman to the High Court in a test case which will decide the level of interest it pays on all its Tessa accounts.
The building society has been told by the ombudsman it must pay compensation to one of its members after a complaint the interest paid on his Tessa Select account between April 1999 and September 2000 was lower than that on NandP's Tessa-only Isa, which was introduced when Isas became active in April 1999.
However, NandP is contesting the ruling and argues Isas were not introduced to replace Tessas, and therefore NandP's differential interest rate levels do not constitute a contravention of the Banking Code which says rates must be equal if one product is introduced to replace another.
Despite its stance, NandP has said that if the High Court supports the Ombudsman's decision, then it will pay all of its Tessa account holders the difference between the interest rates at an average cost of around £75 per member. This would be equivalent to a £1.3m total payout representing approximately 7.5% of its annual profits.
According to the Moneyfacts Group, the NandP Tessa is the best performing of all Tessas calculated by maturity values.
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