Have your say on ISA transfers

3guesses

Have done a number of transfers/partial transfers pretty successfully, but had a MAJOR headache with one partial transfer from my Alliance & Leicester ISA - they decided to send it to the wrong institution for some reason. I spent about 6 months trying to get it sorted out. TBH I can't remember how I left it! Must go back and check it was actually sorted out properly...

My one major gripe about ISA transfers is the ID checks: if you have already had to go through ID checks to open the ISA in the first place, should it REALLY be necessary to go through those ID checks AGAIN with the new institution??? I know they'll say that they have to otherwise they face major fines from the Regulator, but really, these checks that are somehow supposed to stop terrorism are completely futile and just another example of New Labour bureaucracy. Having massively exacerbated the global terrorism problem in the first place, they now justify keeping themselves in their jobs by having to come up with ways to deal with the huge mess they themselves caused... all at our expense.

Rant over 8-)

Porcupine

These were my additional comments:

For a non-taxpayer, an ISA loses money compared to a traditional savings account.

First, the rates are lower than the equivalent rates on non-ISA accounts - I assume because banks think that ISA holders are a captive market and they don't need to compete. This difference can be equivalent to the tax that might be deducted from the non-ISA account... in other words the bank is keeping the tax incentive, not the accountholder.

Second, due to the archaic practice of banks sending cheques to each other for transfers, which get delayed in the post (eg over Christmas), sent to the wrong department, left in a processing queue for weeks or months, lost, etc, etc, there's a considerable loss of interest every time an ISA is transferred. This is a serious disincentive to competition, because customers stay put rather than switching and risk losing interest.

The overheads for the bank to run a cash ISA are more than a normal savings account, so it is understandable to some degree why there is a difference in rates. I would resolve this by removing the red tape.

I would like to see a means by which any account can be declared an account holding ISA funds, with some way to manage the tax-free component (for example, a credit of the tax back at the end of the year, or a way to claim it from HMRC). That way it would be possible to move funds around yourself simply by withdrawing it and walking across the street to the other bank, which is much more speedy and efficient than bank bureaucracies sending each other cheques. It worked when Icesave went bust (the FSCS paid out cash to normal bank accounts, and issued printed certificates, which needed to be used to redeposit ex-Icesave ISA money in a new ISA), so I can't see why it won't work in general.

cyclonebri1

Can I ask of anyone who has recently tranferred a cash ISA, did you have to do anything other than inform the bank you were transfering to, ie, was it neccessary, or were you advised by the new provider to request the transfer be made to your original bank?.

This is where mine went wrong last year as I only put in the application to the new provider. I was later advised that I should have also told the old one.

What is the full procedure???

cyclonebri1

Porcupine wrote: »

These were my additional comments:

For a non-taxpayer, an ISA loses money compared to a traditional savings account.

First, the rates are lower than the equivalent rates on non-ISA accounts - I assume because banks think that ISA holders are a captive market and they don't need to compete. This difference can be equivalent to the tax that might be deducted from the non-ISA account... in other words the bank is keeping the tax incentive, not the accountholder.

Second, due to the archaic practice of banks sending cheques to each other for transfers, which get delayed in the post (eg over Christmas), sent to the wrong department, left in a processing queue for weeks or months, lost, etc, etc, there's a considerable loss of interest every time an ISA is transferred. This is a serious disincentive to competition, because customers stay put rather than switching and risk losing interest.

The overheads for the bank to run a cash ISA are more than a normal savings account, so it is understandable to some degree why there is a difference in rates. I would resolve this by removing the red tape.

I would like to see a means by which any account can be declared an account holding ISA funds, with some way to manage the tax-free component (for example, a credit of the tax back at the end of the year, or a way to claim it from HMRC). That way it would be possible to move funds around yourself simply by withdrawing it and walking across the street to the other bank, which is much more speedy and efficient than bank bureaucracies sending each other cheques. It worked when Icesave went bust (the FSCS paid out cash to normal bank accounts, and issued printed certificates, which needed to be used to redeposit ex-Icesave ISA money in a new ISA), so I can't see why it won't work in general.

I'd put it even stronger, it's actually costing a lower rate, (average) tax payer money too. :mad:

cottager

cyclonebri1 wrote: »

Can I ask of anyone who has recently tranferred a cash ISA, did you have to do anything other than inform the bank you were transfering to, ie, was it neccessary, or were you advised by the new provider to request the transfer be made to your original bank?.
This is where mine went wrong last year as I only put in the application to the new provider. I was later advised that I should have also told the old one.
What is the full procedure???

According to the guidance an ISA transfer request should be to the new provider. AFAIK it's not usually a requirement to notify your existing provider; but I have heard of some providers mentiong it or even providing a form to do so. For example, there was a post in December from someone transferring their ISA to Standard Life which said SL had sent them an additional form intended for the existing provider.

HMRC's guidance for ISA managers on transfers starts on p100 of this document:
http://www.hmrc.gov.uk/isa/isa-guidance-notes-2008.pdf
and begins with:

Investors must make a Transfer Application to the new manager when requesting a transfer.
There are some circumstances where it could be necessary to notify the old provider; and I guess in theory it's also possible for any provider to set out conditions about this in their own T&Cs, but I'm not certain and haven't come across it myself.

Or it could simply be advisable or something you prefer to do. For example, for a fixed rate ISA where you want the TF to take place on maturity but sent the transfer request to the new provider ahead of time: for clarity you could write to your old provider to notify them but confirm the transfer was not to take place before the maturity date.

OneADay

Up till Jan 2009, my cash Isa had built up with Halifax but rates were poor.

So I decided to go to A&L, I cant remember when I asked for transfer to be carried out but it was sometime before Christmas 2008. Took till 10th Jan to get into A&L and had to phone up a few times.

April 2009 - Opened a new cash Isa with Barclays (rate was good initially).

Come July 2009, A&L rates are going down and again have to find a new home for the bulk amount of the ISA. Moved to Aldermore 30 day notice ISA paying a decent rate at the time. Ended up chasing both parties, has the cheque been sent, has it not been sent GRRR.

Nov 2009 - Barclays are now dropping rates and so started a new transfer to Aldermore to combine both my previous years Isa amount with 2009 year. This ended up a struggle too. Had to phone back and forth. First cheque apparently not reached Aldermore and Barclays re-issued the cheque. Even went to the local branch of Barclays to chase it up - no good. Finally had the Barclays Isa combined with Aldermore 30 day Isa completed by 10th December. I think I made the request to transfer middle of November.

Feb 2010 - Aldermore saying they are dropping their ISA rate. Had enough and moved to M&S 3 year fixed rate offering. This was by far the smoothest process. 30 day notice was served through the transfer request to M&S and money was moved promptly on 30th day.

All in all - there is a deliberate delay tactic by the larger banks to delay the process. They choose to send out cheques between each other (so I am told) rather than electronic transfer. As a customer you end up chasing them, wasting time and money on calls .... oh and interest.

And even though I am not with Aldermore anymore, their response to queries and service was excellent compared to the larger banks. They had online access to the account which M&S now do not.

cyclonebri1

cottager wrote: »

According to the guidance an ISA transfer request should be to the new provider. AFAIK it's not usually a requirement to notify your existing provider; but I have heard of some providers mentiong it or even providing a form to do so. For example, there was a post in December from someone transferring their ISA to Standard Life which said SL had sent them an additional form intended for the existing provider.

HMRC's guidance for ISA managers on transfers starts on p100 of this document:
http://www.hmrc.gov.uk/isa/isa-guidance-notes-2008.pdf
and begins with:

Investors must make a Transfer Application to the new manager when requesting a transfer.
There are some circumstances where it could be necessary to notify the old provider; and I guess in theory it's also possible for any provider to set out conditions about this in their own T&Cs, but I'm not certain and haven't come across it myself.

Or it could simply be advisable or something you prefer to do. For example, for a fixed rate ISA where you want the TF to take place on maturity but sent the transfer request to the new provider ahead of time: for clarity you could write to your old provider to notify them but confirm the transfer was not to take place before the maturity date.

Yeh, I thought that should be the case, but the whole lot went wrong, and it took over 5 weeks, outside the alloted time to complete, I had to duplicate everything, and lost the rate I was transferring for. :eek:

Well it's all swap again next week, we'll see how this years goes.

Footnote;

Are cash ISA's worth the bother/hassle????????????????????

10_66

cottager wrote: »

Or it could simply be advisable or something you prefer to do. For example, for a fixed rate ISA where you want the TF to take place on maturity but sent the transfer request to the new provider ahead of time: for clarity you could write to your old provider to notify them but confirm the transfer was not to take place before the maturity date.

Unfortunately, even that doesn't help if it's Santander. I did exactly this 2 or 3 weeks' ago for a previous B&B Fixed ISA (unfortunatley, defaulted to Abbey/Santander). Despite it being made extremely clear on the transfer form sent by the new provider, and my sending a letter to Santander confirming transfer was not to be carried out before maturity, I received a letter from Santander stating they would be completing the transfer within 10 working days. On ringing them to halt the process, Santander said they don't have a "diary" system to enable this request and that all transfer requests are dealt with immediately. I know I shouldn't be surprised by their incompetence having had problems with them a couple of years' ago, when they lost the transfer cheque and it took weeks' to sort out. I would never go near Santander again, regardless of the rate they were offering.

Gordon_the_Moron

cyclonebri1 wrote: »

I'd put it even stronger, it's actually costing a lower rate, (average) tax payer money too. :mad:

I'm a lower rate tax payer

Most of my money is in Newcastle Building Society ISA, 5 year fixed rate @ 5.0%
The rest is currently in Saffron Building Society (7% regular saver) and about to be transferred to Nationwide's 3 year 4.4% deal (it matures on Tuesday)

I'd love to know if I can I beat this outside ISAs?

ses6jwg

Every ISA account should allow transfers in, how's that for starters?