Interest on deposits paid

[J7J]

Hi,

Is it compulsory for an institution that requires a deposit to keep this deposit in an interest bearing account and then when the time for the refund of the deposit arrives, to refund this deposit to you including interest earned on it? (ie. if your child's school holds your deposit for the 4 years that your child is in their school and refunds the deposit when your child leaves the school - can they refund you the amount that you paid 4 years ago, or must it have increased with the interest on that money).

THANKS!

[Phil Cooper]

This is the case where rental deposits are held for property rentals, but I don't think it is a general law.

[sterne.law@gmail.com]

The consumer protection act requires that deposits are kept separate from other monies. A deposit does not belong to the person holding it, until it is required to be used for a specific purpose

[Miro Bagrov]

I think that the deposit represents a Liability to the company, they must recognize that this money is not theirs on their financials.

However, what they do with the cash in the meantime is up to that business. Only should they fail to return the deposit is that a breach of contract. Unless the institution is a externally regulated one - for example a bank - then the regulation from financial industry apply.

And they do not necessarily have to give you interest unless it was on the contract. Always refer to the fine print with interest and refer to the type of regulation applicable to that industry.

[sterne.law@gmail.com]

The consumer protection act has no specific reference to interest.
However, section 65(2)(a) reads: not to treat the property as being the property of the supplier

Im inclined to read this to to say I can not be investing on my own behalf, because it is not something that belongs to me.
section 65(2)(b) also talks about exercising due care, diligence and skill expected of a person responsible for managing any property belonging to another
Again skill could be read to refer to investing and managing property is quite specific.

Im also inclined to feel that if a contract had a term saying that the holder of the deposit gets the interest, that such a clause could be ruled unfair.

[DeonT]

The consumer protection act has no specific reference to interest.
However, section 65(2)(a) reads: not to treat the property as being the property of the supplier

Im inclined to read this to to say I can not be investing on my own behalf, because it is not something that belongs to me.
section 65(2)(b) also talks about exercising due care, diligence and skill expected of a person responsible for managing any property belonging to another
Again skill could be read to refer to investing and managing property is quite specific.

Im also inclined to feel that if a contract had a term saying that the holder of the deposit gets the interest, that such a clause could be ruled unfair.

Agreed. I am not convinced that the Consumer Protection Act goes so far as to require the school to put the parent's deposit in an interest-bearing account. Reading the wording of the Act, it seems that the aim was to ensure that the deposits are held separate from the supplier's money. If you compare it to the Estate Agency AffairsAct and the Attorneys Act, those Acts had specific provisions requiring monies to be deposited in interest-bearing accounts. The CPA doesn't.

[Houses4Rent]

I guess just ask the deposit receiving party about their terms, what interest they pay if any and what bank costs might have to be deducted from that interest.
Correct, property rental depsoits have to generate interest for the depositor, but nowhere is it stated at what rate. When you make a deposit towards a purchase of a property make sure you state in the OTP that it must be invested in an interest bearing account to your benefit. If you do not do that the interest does not accrue to your benefit and the lawyer wil take some and the law society some too. I just bought a flat and happened to check out the interest they paid me. It was wrong. They said this is what the bank gave them. I told them nect time you better check what the bank gives you (resonable fiduciary care), tough for you to accept crap, get it corrected from the bank or pay the difference in yourself. They eventually had to pay me the shortfall as they could not proof my calcualtions wrong. It was a battle and I had to start threating them though. Instead of simply saying sorry, living up to it and moving on they tried to brush me off. So much for ethics of a lawyer....