Ditch Abbey ISA to FirstDirect?

houmie

Hi,

I am in process of switching my current account from Abbey to FirstDirect, which is almost complete. Few weeks back I saw on Martins recommendation that Abbey is giving a clean 3 % for my ISA. So happily I requested to open a CASH ISA with them. However transfering the existing funds to them doesnt seem as easy as I thought. First they were no forms posted to me. After weeks of waiting, I called them up and they said I had to download them myself and fill them in and send it to the, Wow what a service. Ok I was trying to fill them out, but then realised I dont even have the ISA number. I went through all pages they sent me. But there is nothing. I tried to login but the cash card they sent me with the ISA request doesnt work. I am totally fed up.

The question is, can I just not transfer my money there and apply straight to FirstDirect in order to transfer all my previous ISA from NatWest in there? Or I am not legally bound to Abbey until the transfer has taken place?

Many Thanks,
Houman

The_Enforcer

It sounds like you at most you have only opened an ISA with Abbey, so as far as I can tell, there is nothing to stop you opening an ISA with First Direct and transferring the funds straight from NatWest to there instead. You can open as many ISAs and transfer existing ISA funds around as much as you like between easy access ISAs without penalties, with the main exceptions being between the same providers.

What you can't do is subscribe (ie deposit non-ISA funds) more than the ISA subscription limit within a given tax year (currently £3,600 and rising to £5,100 for over 50's in Oct and everyone else in 10/11) and that subscription can only be paid into one ISA at a time. In order to subscribe to another ISA within the same tax year you will have to transfer the subscription to it first.

If your amount to be transferred is less than £10k, then you would only get 2% anyway from Abbey, as it's a tiered account, in which case FD is the better option as 3% applies from £1.

houmie

Thanks mate. I think I will do that. Can't be bothered with the hassle chasing Abbey. I remember openeing the current account has also been a pain.

I would have had 15K ISA anyway, so 3% would have been in both cases. But First Direct were quite efficient so far. Maybe they are also fast in opening the ISA account and transfer the funds...

Could I just close the Abbey ISA account without penalty?

Baldur

houmie wrote: »

Could I just close the Abbey ISA account without penalty?

Just cancel the transfer to Abbey and close the account - if you haven't funded the account it's not an ISA as far as HMRC are concerned.

It's not strictly necessary to close the account as if it remained open but empty it would have no effect upon your transfer to FD but, because of the Cash Card, it's probably wise to do so.

The_Enforcer

Leaving an account open and idle can be a mixed blessing, because on the one hand some products are available to existing customers (but usually it's a current account that you need), but on the other hand, new ISA products are often only open to new customers (particularly if you have an old ISA with them).

houmie

I just received this email from FirstDirect:

We wish to inform that you are allowed to subscribe to one ISA per tax year. As you have already opened a Cash ISA with Abbey, you would need to contact HMRC on 08456 041 701 and update us, if you wish to open ISA with first direct.

I think I have to go through the hassle with Abbey afterall and transfer the ISA to there...

Baldur

houmie wrote: »

I just received this email from FirstDirect:

We wish to inform that you are allowed to subscribe to one ISA per tax year. As you have already opened a Cash ISA with Abbey, you would need to contact HMRC on 08456 041 701 and update us, if you wish to open ISA with first direct.

I think I have to go through the hassle with Abbey afterall and transfer the ISA to there...

If you have paid no new money into the Abbey account since 6th April 2009, you have not subscribed and there will be no problem - just ring the HMRC ISA helpline number given and give them the details.

houmie

Baldur wrote: »

If you have paid no new money into the Abbey account since 6th April 2009, you have not subscribed and there will be no problem - just ring the HMRC ISA helpline number given and give them the details.

I think you are right. After another enquiry FirstDirect sent me this:

"As you have not subscribed into the ISA with your current provider for this tax year, you can always choose to close the account and open a new ISA at first direct. According to HMRC regulations, you may have a few ISAs but you can only subscribed to one ISA per tax year."

Translated it should mean what you just said before, I hope. :-) correct?

Lokolo

houmie wrote: »

I think you are right. After another enquiry FirstDirect sent me this:

"As you have not subscribed into the ISA with your current provider for this tax year, you can always choose to close the account and open a new ISA at first direct. According to HMRC regulations, you may have a few ISAs but you can only subscribed to one ISA per tax year."

Translated it should mean what you just said before, I hope. :-) correct?

Baldur's always correct.