Zag's systems continue to be flawed | Page 2 | Zag Bank | Discussion forum

NorthernRaven said

You would choose "At Maturity" for fully compounding interest, otherwise one of the payment options if you wanted payouts at certain intervals. I don't think I've ever seen your distinction between interest "paid" and "paid out". "Paid" would generally imply monies are being extracted from the GIC and placed into the customers hands in some form. They correctly state that the interest is calculated daily and compounded (not paid) monthly, as in "included with the principal for interest calculation purposes". Paid is separate, and you are merely stuck with a payment option you don't want (monthly) rather than the one you do (at maturity). There doesn't seem to anything misleading. With the current online application you would have to explicitly have chosen the payment option; I don't know if it was somehow different when you arranged for your GIC.

The fact that NorthernRaven needs to direct the purchaser to choose 'at maturity' in order to get the compounding interest and has had to provide her/his own redefinition of the terms demonstrates the problem with Zag's T&C.

When the T&C tells you that you are going to get compounded monthly interest, you have reason to assume that is the norm for them, regardless of whether any other bank does likewise (which you may or may not know). And you have reason to assume that you would not be opting out of this if you chose the monthly option.
"Paid" may mean "separate" in some people's minds, but not in others. "Paid" could equally mean "paid into the GIC", as there is no other way to get "monthly compounding". It would be what someone would expect if they did not have any reason to assume that "paid" meant "separate".

Again, I think only someone who has worked in the banking or financial industries or who has a familiarity with it beyond that of the average person would make the interpretation that NorthernRaven has made. The terms are poorly written, and the complainant is entitled to restitution. I would certainly have been confused by this kind of language. I would have perhaps (not necessarily) have had the wits to inquire about it, but certainly would not have when I was younger.

The question will be whether the Ombudsman has sufficient knowledge of how people unschooled in the special terminology of the banking industry would read these terms.

I'm wondering, what your background is, NorthernRaven, as you seem to know a lot about how this industry operates and we have benefitted from that in the past.

Northern Raven, I'm with you on this one, it was pretty clear to me too. Plus Just the facts said "I have held many GICs", so not a neophyte. No matter what safeguards it's normal for sometimes there to be misunderstandings between humans, things happen, and not every misunderstanding is an indication of a systemic problem with the need for 3rd party or regulatory intervention. Lesson learned: Responsibility is not one-sided, it's shared by both parties, so if something is critical to you, don't assume, make sure to double or triple check, even if it looks clear to you, before you commit to a contract.

My first thought when I went through the GIC purchase part of the Zag's web site was that "how often would you like your interest paid?" referred to how often the accrued interest was posted and compounded.

I had wondered why anyone would select anything but "monthly". After all, why would anyone wish their accrued interest to be posted/compounded semi-annually, annually, or at maturity instead of monthly with no adjustment in the rate?

Now, with this discussion, it all makes more sense. I think it would have been clearer if these were the choices:

1. credited and paid out monthly
2. credited monthly and paid out semi-annually
3. credited monthly and paid out annually
4. credited monthly and paid out at maturity

I agree with Norman. Zag has chosen to do things differently than other FIs. The customer should be able to take that at face value.

As you probably know, you still have one more level of complaint, which is to the federal banking ombudsman.

I think that outsourcing complaints is sleazy; also stupid from a PR point of view. When a person has a complaint, they specifically wish to speak to the bank staff member who is in charge of complaints, and rightly so.

I can't really comprehend the "solution" that you have been offered.

We have so far made two complaints to banks through official channels. The first went to BMO and was satisfactorily and cordially resolved by a person who worked in the BMO VP's office. He investigated, got back to us when he said he would, fixed the problem, made the change we recommended in their practices and compensated us for our trouble in the way and amount we requested. He did everything perfectly.
The second was with Luminus,which was resolved, but did not leave us with a good feeling as their practices do not appear to have changed and we had trouble communicating with them. It is actually for this reason primarily that we will discontinue the membership when the current promo ends. They don't seem to have learned that it really matters how you handle complaints and how well you train your staff. We dealt with too many people there who really didn't know what they were doing.
As interest rates continue to fall and the differences in rates between FIs gets correspondingly smaller, CS will matter more and more, at least to us.

I find it annoying when the person who is listed as the bank's ombudsman (or at least his/her office) is not the person who gets back to you. With Luminus we were passed off to an underling. If the underling is going to be doing the work, it would be more honest to list that person as the ombudsman.