Nutmeg pulls plans to allow HTB ISA transfers to LISA

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  • Chapuys wrote: »
    Your LISA has to be open a year before use. That means anyone switching (unless I'm horribly wrong) would have to wait until next November to use it to buy a house as you are opening a new LISA. I am frustrated like the OP because of this reason as my plans to buy in the early Summer may need to change.

    I plan to complain officially but doubt it will do anything. I am already eyeing up Skipton for December 9th (after my yearly ISA interest is paid out on my HTB ISA). I'm also wondering whether I should keep my £6k HTB ISA as just a regular saver and forgo the 25% bonus as I still get 3.5% on my HTB ISA.

    My understanding of the "one year" rule, is that the year starts from the time you open the LISA. If you transfer your LISA to a different provider, you are not closing the account and opening another, you are simply keeping the same LISA open but moving it to the care of a different institution. So if you opened your LISA April 2017, and transfer it to another provider in November 2017, your "one year" date to qualify for the 25% top-up is still April 2018.

    I'm not sure what benefit there is in keeping your "£6K HTB as a regular saver", as the 25% top-up is surely far better value than the 3.5% the bank pays. Am I missing something?
  • Just chatted with AJ Bell. They confirmed that the ability to transfer an existing LISA to them will be available before the end of the year. So AJ Bell seems to be an option.

    That is, of course, assuming I'm willing to once again believe the promises of a financial provider regarding the future availability of ISA transfer services. :-D
  • Alexland
    Alexland Posts: 9,653
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    edited 2 November 2017 at 7:32PM
    Now you are seeing why so few financial institutions want to get involved with the complexity of the product!

    Still if you are willing to put up with the hassle it can be beneficial depending on your circumstances.

    Our Nutmeg LISAs just hit £4170 today - at this rate the investment may earn more than the bonus :-)
  • Ed-1
    Ed-1 Posts: 3,867
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    Alexland wrote: »
    Now you are seeing why so few financial institutions want to get involved with the complexity of the product!

    Still if you are willing to put up with the hassle it can be beneficial depending on your circumstances.

    Our Nutmeg LISAs just hit £4170 today - at this rate the investment may earn more than the bonus :-)

    Hopefully once this one-off element of complexity is taken out of the equation after 2017/18 then more will come on board...
  • Alexland
    Alexland Posts: 9,653
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    Maybe but for those who fail to buy a property then its still very difficult to explain why there is a penalty before they can have their money back.
  • Chapuys
    Chapuys Posts: 156
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    Alexland wrote: »
    Maybe but for those who fail to buy a property then its still very difficult to explain why there is a penalty before they can have their money back.

    I don't see it as difficult, it's obvious. There is a penalty because I see it as essentially a retirement product - like a long term fixed bond - which you happen to be able to access to buy a house with without the penalty.

    Why a lot of financial institutions do not like the Lifetime ISA isn't really to do with the 25% penalty. It's to do with a possible future miss selling scandal. It isn't the best way to save for a pension, so they don't want to be accused of encouraging people into a Lifetime ISA and then those people pulling themselves out of a lot better workplace pensions. Thats why Skipton & co are very adamant that they have not given you financial advice when signing up to the Lifetime ISA.
    Anything I say in no way constitutes financial advice and anything you do is your own decision.
  • howzat92
    howzat92 Posts: 35
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    I am also very annoyed at Nutmeg however I got fed up of their constant rubbish about not knowing when the transfer system would come in and started the process of moving my money to Skipton LISA instead.

    Seems it was a good decision as a week later they released the statement saying they are not offering the transfer. Ridiculous service - only signed up to it with them as I assumed I could transfer in my H2B ISA so they were making money from everyone who transferred in whilst our money was in there with possibly no intention to set up the transfer service.
  • Alexland
    Alexland Posts: 9,653
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    I doubt they make money from short term account holders as their fee is relatively low and the admin costs for gaining and exciting a customer are high. I believe it was genuinely their ambition to get the facility online. Hopefully with rising markets you will have made a slightly better return than a cash product.
  • Chapuys
    Chapuys Posts: 156
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    Alexland wrote: »
    I doubt they make money from short term account holders as their fee is relatively low and the admin costs for gaining and exciting a customer are high. I believe it was genuinely their ambition to get the facility online. Hopefully with rising markets you will have made a slightly better return than a cash product.

    More than likely it was created just to advertise Nutmeg itself 'one of the few LISA providers' a loss leader. I didn't really know of Nutmeg before LISA came out and I gave it a £100 punt. I then decided to use it for £5,000 savings investment. They now have no intention for developing LISA now they have used it for their advertising potential.
    Anything I say in no way constitutes financial advice and anything you do is your own decision.
  • Alexland
    Alexland Posts: 9,653
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    edited 11 November 2017 at 2:09PM
    Well it was a one off development for a specific financial year so of limited benefit to some customers. They haven't ruled out future LISA product development.

    A few months ago I did a telephone customer Q&A with Nutmeg they admitted they didn't know what proportion of their LISA customers were saving for a home or age 60 as they forgot to ask on signup. I pointed out this must make it very hard to understand their future management revenues and they agreed.

    As such they would have no idea how many customers were both saving for a property and planning to transfer HTB ISAs.

    I like and plan to keep our Nutmeg fixed allocation LISAs but I moved my ISA elsewhere. AJ Bell would be cheaper once the LISAs are bigger but we already have other investments with them so it would be too much risk.

    Alex
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