Super Complaint into Cash ISA transfers launched - let the OFT know you views

MarkyMarkD

Red_sky wrote: »

Hello Mark

When I made an official complaint about the length of time it had taken for my ISA to be transferred, the company in question sent me a letter which quoted the HMRC's guidelines (not the FSA - sorry Mark my mistake) which they had to follow for an ISA transfer to take place. In it it said that the 'transfer date' must be the same date when transferring from one ISA to another. I can only tell you what I was told. They also compensated me for the time it had taken from writing and sending the cheque to the date the cheque was cleared ie. when the actual transfer took place. I'm sure there are guidelines which the banks or building societies should follow even if these are only guidelines and not compulsory because they certainly don't follow them as all these posts have confirmed. Why should anybody lose interest on their ISA when the money is transferred directly between 2 banks and why don't they transfer the ISA money electronically instead of sending cheques through the post? How outdated is that?

Thanks for your reply.

I know the HMRC guidance very well, and the point they make about the "transfer date" being the same is irrelevant to your point and rather meaningless in total. It is there to ensure that the customer doesn't have two ISAs in place at the same time; it doesn't say that the two institutions have to pay interest from and to the same date.

"Why should anybody lose interest"? Because all financial institutions stop paying interest on the day before they draw a counter cheque. That's simply how it works. Why should ISAs be any different?

"Why don't they transfer the ISA money electronically?" Because, despite HMRC's blusterings on this subject, it is HMRC which requires the financial institution to have all the paperwork in place, before the funds are credited to the new ISA. If the funds were sent electronically, the information wouldn't get there and the ISA would be invalid. It needs an electronic data interchange system, for this to work. And HMRC couldn't be bothered to build one - and they are the only logical people to do so, as then all providers could be required to use it. Unilateral efforts by a few ISA providers are never going to get buy-in across 100s of ISA providers.

inca_2

I can understand the point of the person frustrated with Nationwide if it was just a case of wanting to hand forms in to be sent off or dealt with later. However, if you were wanting to actually open the account there and then and sit down with someone to do it, depositing any of this year's allowance in addition to the transfer then it's not that unusual to need to make an appointment during the first week or two of the tax year.

There is only so much capacity in any branch which is basically number of people to open accounts and the amount of time in the day. We have given customers the option of filling the forms in in the branch and leaving them with us to open later in the day (can be done in a few minutes if all the forms are pre-completed and you don't have the customer in front of you and customers don't lose any interest as we will make sure any new deposits are paid in on the same day).

As for seeing people in the branch not opening accounts, not all staff in branch are there to open savings accounts. I'm the manager so you might see me and wonder why I can't do it and assume I'm not doing anything else, chances are I'm either covering on the counter for deposits withdrawals etc so that everybody else is free to open accounts or I could be about to go into a mortgage appointment/meeting myself in the next few minutes. Same with the mortgage advisors, they probably aren't free to open your account because they are likely to be going into a mortgage appointment shortly or returning customer's calls. 2 weeks does sound a long time to wait though, we've got a popular rate at the moment but if a customer doesn't want to leave forms with us we can usually fit them in the next day or the one after at worst it's just that we might not have someone free there and then.

inca_2

In addition to the war and peace post above, there definitely needs to be a better system in place, it's actually pretty embarassing telling customers to anticipate that it could take 30 days to receive the transfer in. I completely understand why they query the length of time when we tell them this.

Red_sky

MarkyMarkD wrote: »

Thanks for your reply.

I know the HMRC guidance very well, and the point they make about the "transfer date" being the same is irrelevant to your point and rather meaningless in total. It is there to ensure that the customer doesn't have two ISAs in place at the same time; it doesn't say that the two institutions have to pay interest from and to the same date.

"Why should anybody lose interest"? Because all financial institutions stop paying interest on the day before they draw a counter cheque. That's simply how it works. Why should ISAs be any different?

"Why don't they transfer the ISA money electronically?" Because, despite HMRC's blusterings on this subject, it is HMRC which requires the financial institution to have all the paperwork in place, before the funds are credited to the new ISA. If the funds were sent electronically, the information wouldn't get there and the ISA would be invalid. It needs an electronic data interchange system, for this to work. And HMRC couldn't be bothered to build one - and they are the only logical people to do so, as then all providers could be required to use it. Unilateral efforts by a few ISA providers are never going to get buy-in across 100s of ISA providers.

How about they send the paperwork first to the receiving bank or the receiving bank set up the new ISA account before sending the transfer forms to the transferring bank, then when the new ISA account is set up the transferring bank send the ISA money electronically straight into the new ISA account? Nobody should lose interest for an ISA transfer directly between 2 banks.

saverbynature

Nationwide to NatWest ISA transfer
Transfer form posted 1st class to NatWest on Sat 13th March
Money credited to my Natwest e-Isa Mon 12th April (although funds not available so I presume a cheque was sent, and now has to be cleared!)

I suppose seeing some of the previous postings a month is ok, but I would have thought transfers could be handled quicker in this day and age. It does seem crazy that financial institutions are still using mail to communicate with each other and sending cheques. If accounts can be opened online, why can't transfers?

Former_MSE_Wendy

The OFT has specificed 10 questions it is looking for responses to. If you have further or specific comments to add please email the OFT's [EMAIL="cashisasuper-complaint@oft.gsi.gov.uk"]Cash ISA Team[/EMAIL]

1. What were your reasons for investing in a cash ISA as opposed to a stocks and shares ISA or other savings products such as savings accounts, premium bonds, savings bonds, etc?

2. How many different cash ISA providers did you consider before finally making your choice? What sources of information did you use to help you?

3. What were the key factors which influenced your choice of cash ISA provider? Please give your answer for:
a. new cash ISAs for the current tax year, and
b. existing cash ISAs you opened in previous years?

4. What factors would make you switch your existing cash ISA?

5. If you have recently switched your existing cash ISA to a different provider, what was your experience of the process? What information did you have on the process of transferring your cash ISA and where did you get this information from? How long did it take? What problems, if any, did you encounter?

6. Have you made a complaint about a cash ISA? If so, who did you complain to, what was your complaint about and how was your complaint dealt with?

7. Which key pieces of information do you consider to be important for you to know in relation to your cash ISA? How would you want to obtain this information?

8. How often do you receive a statement from your cash ISA provider? What information relating to your cash ISA is provided on your statement? Is there other information you would want to be included? Is there information on your statement that you feel you don't need?

9. Do you know what rate of interest is currently applicable on your cash ISA product? Please give your answer for:
a. new cash ISAs
b. existing cash ISAs you opened in previous years.

10. If the answer to Q9 is YES, where did you get this information from? If the answer to Q9 is NO, would you know where to look to get this information?

Thanks

MarkyMarkD

Red_sky wrote: »

How about they send the paperwork first to the receiving bank or the receiving bank set up the new ISA account before sending the transfer forms to the transferring bank, then when the new ISA account is set up the transferring bank send the ISA money electronically straight into the new ISA account? Nobody should lose interest for an ISA transfer directly between 2 banks.

Because it's obviously safer to send the paperwork with the money, and that means in the form of a cheque.

Because there is no incentive for the "old" bank to send it electronically.

Because sending money instantly costs the banks money; cheques are cheaper.

What more reasons do you need?

Why should banks bear the cost of customers moving their money, chasing better rates?

[Deleted User]

I've just filled in the Consumer Focus questionnaire as follows:

In addition to speed of transfer, there are two other issues:

1)Some banks fix the interest rate AFTER the transfer is received rather than at the time of application (eg: Halifax, Julian Hodge).

2) On a like for like basis, rates are consistently lower than a taxed account. This effectively means that the banks are pocketing the rebate that the Chancellor intended for the investor. (eg: for a 3yr fixed account, the best rates I can currently get are 4.65% taxed and 3.75% ISA, effectively making the ISA only 0.03% better than the taxed a/c.)

rb10

jack_pott wrote: »

Some banks fix the interest rate AFTER the transfer is received rather than at the time of application (eg: Halifax, Julian Hodge).

This is incorrect, at least in the case of Halifax.

At Halifax, you get the highest rate out of the rate that applies on the date that you opened the account, and the rate that applies when the transfer is received.

So you could find that you actually get a higher rate than you signed up for, but will never get a lower one.

jack_pott wrote: »

On a like for like basis, rates are consistently lower than a taxed account. This effectively means that the banks are pocketing the rebate that the Chancellor intended for the investor. (eg: for a 3yr fixed account, the best rates I can currently get are 4.65% taxed and 3.75% ISA, effectively making the ISA only 0.03% better than the taxed a/c.)

And yet on instant access accounts, the best you can get are 3.2% in an ISA (Santander/A&L) or 2.4% net from a non-ISA account (Halifax).

[Deleted User]

rb10 wrote: »

At Halifax, you get the highest rate out of the rate that applies on the date that you opened the account, and the rate that applies when the transfer is received.

When I opened a Hfax ISA yesterday they gave me a separate letter explaining that. It makes you wonder why they can't just word it that way in the terms and conditions in the first place. They do say however, that this is conditional on your old provider meeting the 60 day deadline.....