Cost to transfer ISA

Sting_2

I was looking through the different ISAs avaliable the other day and looked at the Rugby and Hinckley Building Society, since I live locally and could open an account with them.

Anyway, the interest rate wasn't the best so I ignored it, but not before noticing that you can WITHDRAW money from the account FREE OF CHARGE, but if you TRANSFER to another ISA porvider they charge you £25.

The Alliance and Leicester did something like this a few years back.

Anyway, I decided to see what would happen if I wrote to them (by E-mail) and ask if I could open an account but for them to remove this charge. I got an E-mail back saying they would not do this for me.

Anyway, I replied asking why they are making it difficult to move money to other providers, yet free to withdraw over the counter. The reply read...

"Regarding your query about additional costs involved for processing a
transfer out of an ISA to a new provider, I confirm that a cheque withdrawal
from the account is a simple process and takes a few minutes to complete.

On the other hand, the administration work involved in processing an ISA
transfer out, is complex and time consuming and therefore the Society
currently makes a £25 administration charge to cover this."

So my question is, is it REALLY and "complex and time consuming" process that justifys a £25 charge? can anyone tell me what is required of the building society other than printing out a cheque and sending it to the new ISA porvider?

isasmurf

Sting wrote:

can anyone tell me what is required of the building society other than printing out a cheque and sending it to the new ISA porvider?

This is roughly the process that they go through.
http://www.hmrc.gov.uk/isa/bullletin29.htm

trackaccessgirl

I moved my isa from barclays to abbey last year and there was no such charge. Some banks might charge, others wouldn't dare, just be careful who you go to I guess. Even if there are costs involved, they should not be offset onto an isa customer. Banks make enough money in the first place, and when you have your money in an isa with them, they are lending it to others at a higher rate, this making money.
The charge is probably largely there to put people off leaving them, or else people might leave every time another bank offers a rate 0.1% higher.

Sting_2

isasmurf wrote:

This is roughly the process that they go through.
http://www.hmrc.gov.uk/isa/bullletin29.htm

Thanks isasmurf - didn't know all that, made interesting reading. Having said that the old provider (in my imaginary example the H+R) would not have to do that much, so it shows me what I thought all along, that it is NOT a "complex and time consuming" exercise and they are just charging £25 to make some money!

Not that I was going to open an account with them anyway, but I will avoid them now.