Abbey ISA transfer error

c_spong

I've had an Abbey Postal Isa for the last 2 years and decided to open an Alliance + Leceister ISA this year to take advantage of the

bonus interest rate until 2007.

My plan was to transfer the majority of my Abbey Postal ISA to the A+L just for this period and then tranfer the money back to the

Abbey afterwards. I've opened the A+L ISA with the full £3000.


And here is were things go a bit messy.

I've just received a letter from the Abbey saying that the tranfer was complete and:

"Unfortunately due to an administration error when processing your transfer this [Postal ISA] account was closed. I have therefore

opened you a new Easy ISA and recredited the the [correct] funds......I can confirm that you have suffered no financial loss as a

result of this error."

Now I can see two things wrong with this:

1. The Abbey Easy ISA has 1% less interest than my Postal ISA (issue 1), (the Postal is now a closed issue hence why i was trying to keep it open)

2. Abbey have opened a new ISA account for me when I have already opened an ISA this year with the A+L. So now i have 2 ISA's (not good) and these total more than the allowed amount per year (not good again). Mr Taxman will be interested in this i'm sure.


So I'm pretty sure that I will suffer financially.

Has anybody got any ideas how I should approach this with the Abbey?

MarkyMarkD

I don't see why you intended to only transfer part of the money from Abbey to A&L - if the rate was better, why didn't you transfer the whole lot?

And HMRC won't penalise you because of Abbey's mistake. Abbey should record the transfer of funds from your existing ISA account as a transfer, not as a new deposit, so it won't relate to this year.

The rules don't prohibit opening more than one ISA, they prohibit FUNDING more than one ISA in a tax year with new funds.

I would recommend checking with Abbey that the new ISA account is recorded as a transfer of funds from your existing ISA, relating to a previous tax year.

But as I said before, why not just transfer the whole lot to A&L?

RichyRich

The reason that the op didn't want to xfer the entirity to A&L is because Postal ISA Issue 1 is no longer available, and has a higher interest rate than Postal ISA Issue 2. He/she wanted to xfer the funds back to Abbey from A&L when the A&L Promotion expired, so had to keep the Abbey Issue 1 open (though I'm not sure whether they'd still accept xfers into it).

Or at least that's how I read it

Rich