Atom Bank PLC · DRN-6050828

The complaint Mrs C complains that Atom Bank PLC acted unfairly in the way it applied interest to her account. She says its terms and conditions weren’t clear and she lost out on interest as a result. What happened Mrs C held a savings account with Atom Bank. The account had two different interest rates: a “Reward rate” and a lower “Withdrawal rate”. Under the terms and conditions of the account, interest is calculated daily and paid monthly. The terms and conditions state that Mrs C will receive interest at either the Reward rate or the Withdrawal rate depending on whether she makes any withdrawals or closes her account in the monthly interest period. The monthly interest period is the period of one month from the day of the month on which the account was opened. The terms confirm that Mrs C will receive the Reward rate upon opening the account and at the start of each monthly interest period. Mrs C withdrew all her funds and closed the account in September 2025. She had received interest at the Reward rate each month up to and including August 2025. But, when the interest was credited in September 2025, Mrs C saw that Atom Bank had applied the Withdrawal rate for the whole of that monthly interest period. She said that interest should have been paid at the Reward rate up to the date of withdrawal. As this hadn’t happened, she said she’d been penalised with a hidden fee of previously accrued interest. She raised a complaint with Atom Bank and asked it to either pay the September interest at the Reward rate or reverse her withdrawal. Atom Bank didn’t agree to her request as it didn’t think it had done anything wrong. It said it had applied the interest correctly, in line with the terms and conditions of the account. It said that information about how the account works was available to Mrs C when she opened the account, and throughout. Mrs C wasn’t happy with Atom Bank’s response and brought the complaint to this service. She said the terms and conditions aren’t clear about how interest is calculated. She said that if she’d known the Withdrawal rate would be applied for the whole of the monthly interest period, she would have waited until the interest had been paid (at the Reward rate) at the end of the September interest period and then withdrawn the funds at the start of the next month. Mrs C said the situation had caused unnecessary stress, which was exacerbated by having to bring the complaint to this service. She sought compensation for that distress as well as payment of interest at the higher rate. Our Investigator didn’t think Atom Bank had done anything wrong. But Mrs C didn’t agree and asked for the complaint to be reviewed by an Ombudsman. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint.

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The issue in dispute here is whether Atom Bank applied the Withdrawal rate correctly and fairly. Atom Bank says it did because, under the terms and conditions, if a withdrawal is made (or if the account is closed), the Withdrawal rate applies for the whole of the relevant monthly interest period. But Mrs C says the reasonable interpretation of the terms and conditions is that the Reward rate applies each day up until the withdrawal, and then the Withdrawal rate applies for the remainder of the monthly interest period. She says this interpretation is supported by the fact that interest is calculated daily. I’ve considered Mrs C’s comments carefully and reviewed the terms and conditions of the account. The terms expressly state that, if Mrs C makes any payment out of her account, she “will receive the Withdrawal rate for that monthly interest period.” The terms also state “If you close your account and you are on the Reward rate, you will receive the Withdrawal rate on your balance for the monthly interest period that you are in.” I think it’s clear from this that, if the Withdrawal rate is triggered (by a withdrawal or closure), it will apply for the whole of that monthly interest period. So, even if a withdrawal or closure happens late in the monthly interest period (as it did here), the Withdrawal rate will apply for the whole of that monthly interest period, effectively backdating that rate to the beginning of the period. I don’t think the terms and conditions are unclear or misleading about this. I find that it was also confirmed by the account summary information sheet which was provided to Mrs C when she opened the account. This document confirms that Mrs C can make withdrawals from the account. But it states “However, remember that if you do make a withdrawal in the month you will receive the lower interest rate for that month.” (I have added the emphasis.) I think the natural meaning of this is that a withdrawal will cause the lower interest rate to be applied for the whole of the month, not just part of the month. The document also states “The Reward rate of interest is paid in any month where a withdrawal is not made and the account is not closed.” I think it naturally follows from this that the Reward rate will not be paid in any month where a withdrawal is made or the account is closed. So, I think it’s clear that, whichever rate applies, it applies for the whole of the month. Atom Bank’s website also explains that the Withdrawal rate applies for the whole of the monthly interest period: “If you do need to withdraw, you can still access your cash instantly but you’ll get a lower Withdrawal rate for the current monthly interest period” (I have added the emphasis). I don’t find this approach to be inconsistent with the fact that interest is calculated daily. The amount of interest due is calculated upon the daily account balance. But the rate used for the calculation is determined by the activity on the account in that month. If there have been any withdrawals, or if the account has been closed, the interest is calculated at the Withdrawal rate. It’s not disputed that Mrs C withdrew all her funds and closed the account. So, I find that Atom Bank was entitled to apply the Withdrawal rate here. And I’m satisfied that it applied it correctly, in line with the terms and conditions. Atom Bank provided some screenshots to our Investigator, showing warnings about the interest rate dropping to the lower rate if an account is closed. It says that these warnings would have been displayed to Mrs C when she closed her account. Mrs C is adamant that these screens did not appear and has described a different warning which was displayed. I don’t doubt what she says. But I don’t think Atom Bank acted unfairly here, regardless of the wording of any warning which was displayed to Mrs C. That’s because I think the account documents explain how the interest rates work and I don’t think it was necessary for this to be explained again or illustrated upon closure to be clear.

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I realise Mrs C feels strongly about her complaint and I’m sorry to disappoint her. But I don’t think Atom Bank acted unfairly here, so I’m not going to ask it to do anything. My final decision For the reasons above, I don’t uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mrs C to accept or reject my decision before 25 May 2026. Katy Kidd Ombudsman

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