Coventry Building Society Accounts

...of interest paid by the Coventry Building Society was about as good as any and as it was a mutual I invested my money.

The Coventry was established in 1884 and describes itself as being one of the top five Building Societies. I suspect this means that they’re number five as I can’t imagine that they’d describe themselves in that way if they were number three. They’ve got almost a million members and are quite aggressive about what ...
...or by transfer from another Coventry Building Society Account, although this can be a little problematical, as we’ll see. There is no penalty for withdrawing funds and this is done by transferring them electronically to your Bank account. The Society’s website (www.coventrybuildingsociety.co.uk) says that access is instant, but you should bear in mind that there will be some delay (usually at least three days) in moving the funds from the Coventry ... more

Six years ago I found myself with some money to invest and I looked around for a good home for it. At that time it was generally the mutuals – the Building Societies that had not yet converted to PLC status – who were providing the most consistent returns, whilst those that had converted seemed to offer accounts that looked good for a while, but the rate of interest they were offering quickly fell.

I won’t confess to being a carpetbagger – someone who invests in a Building Society in the hope of getting a windfall when the Society converts to PLC status – but the possibility that this might happen is something that I’ve always kept in mind when I’ve made investments. It doesn’t drive the investment, but in a situation where a mutual and a non-mutual have otherwise been equal I’ve always gone for the mutual. The rate of interest paid by the Coventry Building Society was about as good as any and as it was a mutual I invested my money.

The Coventry was established in 1884 and describes itself as being one of the top five Building Societies. I suspect this means that they’re number five as I can’t imagine that they’d describe themselves in that way if they were number three. They’ve got almost a million members and are quite aggressive about what they see as the need to retain mutual status.

My initial investment was in a Fixed Rate Bond for three years. The application process was smooth and as uncluttered as is possible given the Society’s need to comply with the current legislation to counter money laundering and the account was opened, by post, within a matter of days. There is a branch network and this is primarily based in the Midlands, but frankly, unless you are determined to spend your lunch break waiting in a queue to be served, you would be better sticking to the telephone-based accounts as these generally offer better rates of interest.

When making the original investment I had chosen a 3-Year Bond because it had always been our intention to have a new kitchen installed just before the turn of the century. In the event we realised that we still didn’t have the faintest idea about what we wanted to do with the kitchen so I took out another Bond, this time for two years. The transfer went smoothly but a little slowly, given that it was a very simple matter. The rate offered was not quite in the top rank as it had been previously, but was still good.

By the time that this Bond matured we had decided what to do with the kitchen and I required a substantial proportion of the money. At the beginning of each new tax year I open a new Cash ISA. It’s my emergency money, so it seemed sensible to move the money that I didn’t need into a mini cash ISA with the Society. Sounds simple, doesn’t it? Well, it wasn’t.

Before I tell you what happened I’ll give you a little bit of background about the account I opened. Under the last Conservative Government we had TESSAs (Tax Exempt Special Savings Accounts) which allowed you to invest £9000 over a period of five years without paying any tax on the interest. This was replaced by the Labour Government with ISAs (Individual Savings Accounts) which currently allow you to invest up to £7000 a year without paying any tax on the income. If you only want a savings account (and don’t want to venture into the world of stocks and shares) you will be restricted to a maximum of £3000 in a cash mini-ISA. Given the current volatility of the stock market this is what I wanted.

When ISAs were introduced the Government wanted to make them more accessible to everyone so they laid down certain standards and an ISA provider is required to state whether or not they meet these standards. These became known as “the CAT Standards” –

The “C” stands for charges, which must be fair. Now, obviously this isn’t going to apply to a cash savings account, but will be important when you’re looking at an ISA that involves stocks and shares.

The “A” stands for access and you must have easy access to your money. For the cash ISA you have to be able to withdraw your money in seven working days and there will be no limitations on how often you can withdraw your money.

The “T” stands for terms. For the cash ISA the minimum transaction must not be more than £10, the interest rate will be no more than 2% below bank base rate and the rate must go up within one month of an increase in the base rate.

The ISA which I opened is the Society’s CallSave Square Deal ISA and it is CAT standard. It promises to pay a variable rate of interest which is guaranteed to be no lower than 0.5% below the Bank of England Base Rate until 30 June 2003. The tax-free interest is paid each year on 31 March and it can be added to the ISA or to another account.

As I was transferring funds from another account and wanted the remaining funds moving into my Bank Account I applied by post but it is possible to apply by telephone. The minimum deposit is £1 and the maximum is the £3000 limit (in each tax year) set by the government.

The account is operated by telephone, but once it is opened it can be operated online. As I’ve put this money away with the intention that it should simply be left until needed I haven’t applied for this service. Deposits can be made by cheque, by standing order from a Bank account or by transfer from another Coventry Building Society Account, although this can be a little problematical, as we’ll see. There is no penalty for withdrawing funds and this is done by transferring them electronically to your Bank account. The Society’s website (www.coventrybuildingsociety.co.uk) says that access is instant, but you should bear in mind that there will be some delay (usually at least three days) in moving the funds from the Coventry to your own Bank. Statements are sent quarterly or on request.

So, I’d sent of the application from, all completed and my instructions as to where I wanted the other funds to go and I did this two weeks in advance of the date on which I wanted all this actioning. There was no acknowledgement. I do hate that feeling of not knowing whether something has arrived! The day came and the day passed. In fact three days had passed after the date of transfer and I’d heard nothing. I rang up. It took some time to establish that, yes; everything had been received and had been dealt with. “The Computer”, apparently, would be sending me “something”.

Two days later my Bank notified me that the funds had been deposited in my account and the Coventry notified me that they had transferred the remaining funds into a Fixed Rate Taxable Bond. I rang again. This time a supervisor had to be spoken to. The problem, apparently, was that it was not possible to transfer the funds from the account which I had held into an ISA; they had to go via this other account but would be transferred into an ISA straight away. “Would you mind if I made a suggestion?” I said. “Why not put a note to that effect on the letter that you send out and it would save people having to ring because they think a mistake has been made?”

“Mrs Magee” she said “I AM trying to help you! I can’t do any more.”

I pointed out that I was actually trying to help her, but, as she then told me “that’s the way it’s done”. It was actually just over three months later, when I received my first statement that I was convinced that I had the right account.

The account currently pays 3.6% per annum interest. The Kent Reliance Building Society pays 4.2% and Intelligent Finance are offering 4.05% for similar CAT standard accounts (source: http://www.moneyfacts.co.uk/) and neither of them are mutuals. When I joined the Coventry they were market leaders, now they always seem to be just a little bit off the pace and customer service is definitely less-sharp than it was in the early days.

All correspondence from the Coventry is marked “be better off: TLC not PLC” but at the moment I can’t see that I’m better off and I seriously wonder if the Society might not be a more efficient operation if it had to answer to shareholders. 

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