TERM DEPOSITS - Beware of lock in on redemption of term deposits

Westpac has included new clauses in Terms and Conditions (T&C's) for Term Deposits opened or renewed from 1 August 2014. These clauses take effect 1 January 2015 and require customers to provide 31 Days' Notice to access a Term Deposit prior to maturity, except in the case of hardship (not property purchases or looking at other investments). The reason behind this is because from 1 January 2015, legislative reforms set by APRA in response to liquidity standards under Basel III will be in place. These reforms aim to increase the resilience of banks in Australia. Across Westpac Group, they are making changes to Term Deposits to align with this requirement. Term deposits can still be cancelled prior to 1 January without the 31 days notification but once they go beyond that date, the Bank will require 31 days notice.

I don’t know the situation with the other major banks but suggest they will follow suit thereon. It is therefore imperative that any monies now locked in on term deposit that straddle 1.1.2015 dates are monies that do not need to be redeemed and/or you can adequately plan to give 31 day’s notice of redemption thereon. Otherwise you may wellcome unstuck in the false assumption that these monies can be readily redeemed at any time and be left in possible financial chaos if funds are required.

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