Cahoot's money problems

Cahoot’s savings account may be near the top of the best-buy tables but there are flaws in its money transfer system that could potentially cost you hundreds of pounds in lost interest.

The problem is that the account’s direct debit system can only manage a limited number of deposit requests at any one time. If you try to make more deposits than the system can handle it will overwrite previous transfer requests without warning.

The restriction, which is not highlighted anywhere on the website, has led to customers thinking they have transferred in more money than they actually have, leaving them short of potentially hundreds of pounds of interest.

For example, if you transfer in £500 from your current account but later on the same day realise you could afford to save £750, the second transfer you make of the extra £250 will overwrite the first, leaving you with just £250 deposited.

The rules are surprisingly complex for such a popular account. The first limitation is that the direct debit system will only allow one transfer of funds per day. The second is that any saver who tries to post date a transfer – say for a week in advance – and then submits a second deposit request before the first is complete, will find that the second transfer amount overwrites the first.

The third, and potentially most costly restriction, is that the account only allows savers to transfer in £50,000 every four working days.

Now this might not be a problem that affects most savers because of the large sums involved but if you come by a lump sum and want to transfer it to your Cahoot account you will have to do it in £50,000 chunks every four days.

If you try to do it in £50,000 chunks on the same day – and nowhere on the website does it say that this is not allowed – you will find that only the final transfer request has been processed. By Cahoot’s own admission, many savers have fallen foul of this problem.

The good news for savers is that John Goddard, Cahoot’s managing director, has promised Times Online that he will look at the issue. In the meanwhile, Cahoot has said it will make the restrictions clearer so that savers are less likely to fall foul of these problems.

Have you experienced problems transferring your money into Cahoot’s saving account? Let us know by posting your comments below.

Footnote posted on February 15, 2006

After reading the numerous comments below, John Goddard has asked that we publish this reply:

"We are currently looking into the issues raised regarding the inconvenient process of making a deposit greater than £50k into the Best Buy cahoot savings account. It is interesting for us to read the other feedback on this website, and I will ensure that any broad issues about our service or products are addressed. As always, we encourage any customers, who have a specific issue with their cahoot account, to contact us directly by calling our customer centre on 0870 6000655 or by emailing contact.us@cahoot.com."

Comments

[David Angell]

In Cahoot's "Regular Payee's" section, you can't make a second payment to a payee until the first has cleared. This is OK for credit card payments, but payments you want to make in advance or a week apart, are not allowed! You have to make a one-off payment. Cahoot says it protects you making a mistake?! It is very inconvenient and annoying.

[Reg Godwin]

Cahoot really need to get their act together. I have never known a more difficult system for either getting an account opened in the first place and then trying to get your money into the account. It's almost like they don't want you to invest with them.

My wife has been trying to open an account since Christmas and they keep returning proofs of identity after 2 week delays. If they won't accept two different bank statements and a letter from the inland revenue, what else do they need? Very frustrating and has made me very reluctant to use them again. Sort it out Cahoot...NOW!!!

[Barry Elsom]

I sent a cheque to Cahoot's for £4,000 using the main Post Office as recommended by Cahoot. The cheque was never heard from or seen again. The PO assured me that they had sent it off, but Cahoot's denied ever having received it.

[Miss G]

A little while ago I applied for a Cahoot account. During the process, I received a letter from a stranger some 100 miles away advising me he had received my credit card and bank statements from Cahoot and telling me the account numbers.

They had informed Cahoot who had asked they be returned to them. They felt it appropriate to advise me of Cahoot's incompetence. When I enquired of Cahoot it made no apology and simply said that mistakes happen.

Not being satisfied that Cahoot’s procedures were adequate to ensure care with my personal and financial information I did not proceed with opening an account. I have no confidence they would take care of my money. This report therefore comes as no surprise.

[david round]

Having spent a lifetime creating computer systems that work I feel I am qualified to comment on the Cahoot problems highlighted on your website. It is particularly of interest to me as I am in the process of opening an account with them.

It is no less than a systems bug and it is completely unacceptable that any system should behave as reported. Not only should Cahoot’s management "look into it" they should get their systems department to correct their design fault forthwith. And own up to it. And maybe fire someone. What awful IT management they must have.

[reinhold muller]

Regarding cahoot current and savings account - I fully agree with the other emails!

Cahoot did not accept my original passport as proof of identity.
I have had a current and a savings account with Abbey for many years and I have never had any bad debts ever but Cahoot say I have a bad credit rating.

[Tony Hook]

I have also found depositing money to Cahoot difficult. I was so frustrated that I sent a cheque only to find it returned. I agree with others when they say I'm not sure they want my money.

The accounts in ING and IF are so much easier to operate.

[Jess Stubenbord]

It seems to be taking ages for a direct debit to be organised with an outside bank so that I can transfer money in and benefit from the high interest rate.

[Olwen Palmer]

I made a transfer into my savings account from a linked non-Cahoot account. The system message was "transfer succcessful", I found some days later when checking my balance that it was not successful. Cahoot claim that my Direct Debit had "dropped off" as I had not used it in 6 months, which is untrue and I am struggling to get any sensible answers from them!

[Sue Shadbolt]

I agree that Cahoot are making it impossible to open an account. They have rejected a 2005/6 Council Tax Bill as a proof of identity because it doesn't have a date on it!! You would have to be blind not to see the date! Also the delays are unacceptable. Having signed a direct debit mandate online the money is sitting in a low interest bank account awaiting transfer to Cahoot whilst they mess about. Sort it out Cahoot!!

[Nigel Harding]

When opening an account with all Igot through all the money-laundering hoops, but then found it impossible to get the money transferred into the account! After three attempts, and several weeks over the Christmas/New Year period, I gave up.

[S. D. Kumra]

A little while ago I opened a Cahoot savings account and found the couple of peculiarities you have highlighted. I left if unused after transferring just 3X £10!

[David Angell]

Current account linked savings account.

Cahoot's system does not allow you to arrange for a transfer from its savings account to its current account at a future date in order to deal with a future payment from that current account.

Other banks - certainly HSBC - have no such restrictions. Cahoot is an excellent account, but why they had to have such a complicated system is difficult to understand. They just put up a brick wall against any criticism if you can speak to anyone in customer services!

[marilyn williams]

I already had a loan from Cahoot, which was paid up. When I wanted to open a savings account, with a substantial sum of money, they wanted to know where it was from. Their reason was "in these days of terrorism and money laundering". I told them I would go elsewhere, and they let me open my account. I also lost valuable interest, whilst waiting, and I have also been with Abbey for 25 years.

[Nick Bridgwater]

Try asking Cahoot for a new cheque book when you've used all your cheques up to the helpful slip in the book that says "it's time to order a new cheque book" ...

... Cahoot absolutely refuses to do so UNLESS all the previous cheques have been cashed - as if you can do anything about when other people present their cheques! As a result they prevent you getting access to your own money - it's not as if they don't already charge you for the privilege of having a cheque book by giving you a lower interest rate.

[not given]

Cahoot looks great on paper, but after a couple of years with them I couldn't stand it any more and have just moved to a bank with branches. The problem with having no branches, is that you can only pay in cheques by post (which adds another two days to clearing the funds), and what annoyed me most of all is that they don't allow you to increase your overdraft beyond an amount set up when you first join them (regardless of credit rating), instead forcing you to take out their flexible loan product.

I have just moved to Barclays premiere, and so far they are proving a relief - in fact it's actually worth the £10 monthly fee, which surprised me.

My partner and I have a joint current account with Cahoot. We have had several attempts at opening a joint savings account, but despite both of us sending secure messages from the website as requested, they keep telling me they don't have my partner's details.

When they later rang up to try to sell me a savings account I decided to give it one more go, but despite the person knowing full well I wanted a joint account, she set it up in my name only.

[G TOBIN]

If you think opening an account is difficult, wait until you try to close one.
Even after you delve through the confused website and transfer out the balance showing, you get a message saying it can take up to three weeks, which means you can't access any accumulated interest for that period.

[m stubbs]

What is happening to Abbey National (parent company of Cahoot)? Thanks to their incompetence and failure to respond to my letters, I moved two large mortgages away from them!

Closure of my Cahoot account is imminent after being told by an Abbey National teller that despite Abbey National being written all over the paying-in slips I could only pay in via a Post Office. I cannot believe how little business sense or customer awareness this company has!!!

Really, anyone thinking about it, just don't go there - it's not worth it when other companies have as good savings rates nowadays.

[tommy]

There's something very bizarre in their terms and conditions - condition 9.3c states that you must take reasonable care etc, and "Reasonable care includes failing to follow the safeguards in condition 8.2."
I wrote to them about this and got the typical moronic response. But if they ever penalise you for failing to follow their safeguards, just point out that the t&c oblige you not to follow them.
If they can make a quite shocking mistake like this, *in a legal document*, what other holes have they left, in their security arrangements for example?

[Max Denyer-Green]

I tried to open a Cahoot account a couple of years ago. After sending proofs of identity time and time again, an account was eventually opened. I transferred money from my current account into Cahoot but it would not show for days and days. I did this a couple of times and each time called Cahoot to find out where my money was. They said they had received my cheques but money never showed up in my account. Eventually I was so fed up with the bad customer service and lack of information, not to mention Cahoot not knowing where my cheques were going, I closed the account and opened an account somewhere else. I could never recommend them. I like to know up front where my money is and what it is doing!!

[J Stynes]

FINALLY somebody has noticed and publicised that Cahoot is absolutely useless as an internet savings account. I had an account for a year, attracted by the high rate, and suffered all the transfer problems described in the article.

It may sound simple but it took a long time to figure out what was going on when you are used to "normal" internet accounts that have no problems handling multiple transactions and advance transactions and there is absolutely no information/warning provided. I recommend staying well away from this account as it is impossible to use efficiently, nullifying any interest rate benefit.

[Jan Smith]

Cahoot services are appaling, I gave up trying to open an account (despite already being a cahoot credit card customer). Weeks passed without them contacting me - I finally phoned them and was told that they did not know why no one had phoned me, but they would not open an account until I complete ANOTHER on line survey on the assumption that because I wish to invest over £5,000 I must be a money launderer!

In addition, their online software is appaling - despite reporting it to them, their credit card balance never shows all transactions, and the balance always adds up to more than listed due to items not being shown! I would advise anyone to stick to high street banks, in comparison they are all excellent!

[D Jeffery]

The direct debit payments from my current account, which are taken monthly to pay my cahoot credit card balance, never actually show up until several days after the money has been taken, leading me to believe that I have more money available than I actually have. This has caused me to go overdrawn (and be charged accordingly) on several occasions.

I've also had problems paying in cash at the post office, where the money hasn't materialised in my account. Luckily I kept the receipt and after contacting Cahoot the money appeared in my account. Only took a month!

I have had a Cahoot current account, and two of their savings accounts, since last June. Whilst the user interface could do with some updating, I find the transactions easy to do, and transfers into/out of my Cahoot accounts have been reliable. I also have a number of other Internet banking accounts (current and savings) and would certainly rate Cahoot as one of the better ones, not least because of their decent interest rates.

The account opening process was painless, I even got paid handsomely to do so by one of the cashback sites. Since the Cahoot current is now my main current account and I have quite a lot of direct debits, I used their direct debit transfer service which was excellent and they kept me informed throughout the process.

The Cahoot webcard is a godsend for me since I do a lot of web purchases. Though at times the card isn't accepted by merchants, and the web card application seems a bit temperamental (read: buggy!) at times. However, the bugs are just in the user interface, the money tracks ok.

Improvement Cahoot could make in my view:
1) allow unlimited deposits per day
2)take a leaf out of Nationwide's book and allow ATM withdrawals abroad free of charge
3) introduce a regular saver account (like the ones from Barclays and A&L)
4) give the user interface a general overhaul. The help system is painful to use, certainly in Firefox.
5) fix the webcard bugs and ensure it is accepted by all merchants.

[Ian Paton]

I have a Cahoot Webcard and, as yet, have not found one website that will accept payment with it. It has been a disappointing waste of time.

[Ann]

Oct 08....the website is up and running but if you try to log in to do ANYTHING with your money you cannot. There is absolutely no information coming in other than the site is being checked for maintenance issues. I cannot believe a bank can close down for 2 days without any truthful information going out and I am also amazed that no press is picking this up. The only info I can find is on forums where other people are experiencing horrendous times as they cannot access any of their money and payments are not being made. I have been a customer for Cahoot for many years but in the current climate I have no room for forgiveness and as soon as they come back online I am removing almost all my funds. The only question I have is where to??