Changes to term deposits: what you need to know

Media release – 12 February 2015

Changes to term deposits: what you need to know before investing

Customers used to breaking term deposits early may soon find they have to give more than 30 days notice or demonstrate they are experiencing hardship if they want to access their money.

“Banks have always had the discretion to decline early withdrawals but some are introducing explicit policies with respect to the notice period customers must give,” Banking Ombudsman Deborah Battell said today.

The changes are a consequence of the lessons from the global financial crisis and are designed to improve the resilience of the banking sector.

“Bank customers are already making complaints to our office. We are expecting that banks will properly implement this new policy and ensure customers are adequately informed.

“We also want customers to know there are things they can do to avoid problems in the future.”

Ms Battell advises bank customers:

• think of term deposits like a fixed term loan - you are generally agreeing not to break the contract for a specified period of time

• try to clearly work out when you are likely to need the funds before fixing the term

• check out alternatives to term deposits if you think you may need the funds at short notice

• check out your bank’s policy and terms and conditions with respect to breaking term deposits

• shop around for the best deal in terms of both rates and policies.

For more information, read the Banking Ombudsman Scheme Quick Guide on Breaking term deposits.

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