ISA Hanky Panky....

londonman81

If the FSA has any balls at all, it should look into this practice...


Near the end of a tax year, a bank starts to advertise a highly attractive ISA rate, knowing full well that most people have used up their ISA allowance for the year and, therefore, can only take advantage of it during the next tax year.

Then...just before the new tax year starts, the bank pulls the plug on the highly attractive rate as otherwise they would be flooded with millions of new customers.


Isn't this distasteful in the extreme??

withabix

Cobblers (and another distateful misuse of the word 'Con').

Santander withdrew it due to being swamped with applications. They acheived the demand that they intended at that rate and withdrew the deal. No different to any other market beating deal.

It was hardly an 'attractive rate' anyway. Just 0.2% more than Barclays, who's rate inc 1% bonus probably will be available until at least May.

Unless you are risk-averse, get a Shares ISA. If you've got an online access one, you could make the year's return in a day and sell back to cash.

You could lose a lot however!

londonman81

withabix wrote: »

Cobblers (and another distateful misuse of the word 'Con').

Santander withdrew it due to being swamped with applications. They acheived the demand that they intended at that rate and withdrew the deal. No different to any other market beating deal.

Clearly, you are in the know then....??

It was hardly an 'attractive rate' anyway. Just 0.2% more than Barclays, who's rate inc 1% bonus probably will be available until at least May.

So it wasn't the highest cash ISA rate?

opinions4u

londonman81 wrote: »

If the FSA has any balls at all, it should look into this practice...


Near the end of a tax year, a bank starts to advertise a highly attractive ISA rate, knowing full well that most people have used up their ISA allowance for the year and, therefore, can only take advantage of it during the next tax year.

Then...just before the new tax year starts, the bank pulls the plug on the highly attractive rate as otherwise they would be flooded with millions of new customers.


Isn't this distasteful in the extreme??

I won't mention the name of a bank which has done this recently (and who I predicted would do this...).

Let's assume you are talking about Santander.

I would hazard a guess that they sat down in a room, probably February time, and tried to second guess what their competitors would do.

After doing this, they made a strategic decision to outprice them with their 3.5% rate.

They spent a fortune on marketing materials which committed them to that 3.5% rate for a period of time.

Then the ISA season started with Halifax, the biggest cash ISA provider, pitching in a 2.6% with, as far as I can see, only Barclays nudging 3%. This meant Abbey were priced not just as "best buy" but as "miles ahead of second best buy and a million miles ahead of the biggest provider".

But they were committed to a certain amount of pre-booked marketing.

The FSA could investigate this practice by all means. All they would find is a bank that misjudged its pricing strategy and paid more interest than it needed to. The winner - those who hopped on board.

By the way, your assertion that "most people have used up their ISA allowance" is nonsense. Most people don't use any ISA allowance and banks will report that their second biggest month for ISA sales is March, suggesting that a significant proportion of those buying ISAs leave it late, having failed to use their ISA allowance in the previous 11 months.

noh

londonman81 wrote: »

If the FSA has any balls at all, it should look into this practice...


Near the end of a tax year, a bank starts to advertise a highly attractive ISA rate, knowing full well that most people have used up their ISA allowance for the year and, therefore, can only take advantage of it during the next tax year.

Then...just before the new tax year starts, the bank pulls the plug on the highly attractive rate as otherwise they would be flooded with millions of new customers.


Isn't this distasteful in the extreme??

You could have signed up for the 2010-2011 Isa with Santander before they reduced the rate. There was no need to wait for the 6th April to apply.

oldfella

banks are not required to offer deals at the time and rate you prefer

londonman81

noh wrote: »

You could have signed up for the 2010-2011 Isa with Santander before they reduced the rate. There was no need to wait for the 6th April to apply.

Well AFAIK the account is only opened once funded with money, and for someone who has used up their ISA allowance it means having to wait until 6th April......