MSE News: OFT announces crackdown on cash Isa rates and transfers

Former_MSE_Guy

This is the discussion thread for the following MSE News Story:

"Providers will have to display the interest rate paid on statements, while they must also speed up switching times ..."

Read the full story:

OFT announces crackdown on cash Isa rates and transfers

Innys

I'll believe this when I see it in action.

Not so long ago the banks promised the Earth with the introduction of the faster payments scheme and look how that turned out.

derrick

Innys wrote: »

I'll believe this when I see it in action.

Not so long ago the banks promised the Earth with the introduction of the faster payments scheme and look how that turned out.

Yep, from the article;- "Although the OFT applied pressure, the moves are voluntary."

And;- "The voluntary changes announced today will give consumers a fairer deal and drive stronger competition."

No change there then!

Why make them voluntary? There is a problem, the OFT know it, but make it "voluntary"!

davidgmmafan

"Providers must also complete transfers between accounts within 15 working days rather than the current 23 working day maximum. This will come into effect from 31 December 2010 and follows countless consumer complaints about delays. The Financial Ombudsman Service says most complaints about delays are upheld in the consumer's favour."

Erm sorry where's the crackdown? Banks don't meet the current voluntary timescale, whcih is not policed and no penalties (hmm why would they?). So the solution is to replace it with a shorter timescale which is not policed and has no penalties?

Why should customers have to spend there time, and waste that of the FOS, when any reasonable person or institution can see the scale of the problem. It IS NOT working. Why not have a special kind of cheque that the customer can deposit in an ISA? Then they know its all done.

elver_man

Its all yet more hot air to make themselves look good, no one takes any notice now and they wont in the future unless strict penalties are enforced.

Each bank / provider will just try to blame the other and then at the end they only get a slap on the wrists.

Yet again its the customer who looses out.

Milarky

Here's how the OFT sums up it's (largely fictional) view of the world of cash ISAs

The cash ISA market

1.5 The cash ISA market has become more concentrated in recent years as a result of retail bank mergers, leading to a moderate level of concentration. However, there do not appear to be any major barriers to entry or expansion that are dampening competition.

1.6 The nature of competition in the market is largely focused on interest rates offered. Our analysis shows that while the interest rates offered on cash ISAs have declined since 2008, they have not fallen by more than the Bank of England base rate has fallen. Interest rates on other savings products have fallen by less than cash ISAs, but this is because they typically started at a lower level and cannot fall below zero.

1.7 On this basis, it does not appear that the structure of the market is substantially harming consumers.

http://www.oft.gov.uk/shared_oft/super-complaints/OFT1246.pdf (page 5)

(This is just sophistry to me)

PS I think the term 'crackdown' for what is technically an 'aquittal' on the most serious charge - that of profiting from deliberately making cash ISAs uncompettive products - and merely entering into an cosy 'agreement' on a 'voluntary basis' to 'speed' ISA transfer times from 4.6 weeks to 3 weeks in 6 months time is somewhat misleading

Milarky

1.14 In addition, the industry has agreed to produce and publish a consumer friendly summary of its cash ISA transfer guidelines. This summary will be made available to all consumers from 29 June 2010 through the BBA, BSA and TISA websites.

(roars the OFT lion)

Here's that 'industry' response - in the form of their current (23 'working' days) set of guidelines - which looks a bit 'Janet and John' - so you can't criticise them for not making it simple!

http://www.tisa.uk.com/uploads/Timeline.pdf

They say: "(Please note that the Guidelines shown here are relevent until the end of Dec 2010. New Guidelines will be introduced after then which will reduce the recommended time for a transfer to 15 working days)."

Milarky

1.19 There may be some additional benefit from bringing the transfer time down below 15 working days. We therefore recommend that the industry consider adopting an electronic system for transfers. The BBA, BSA and TISA have committed to undertake a feasibility study to take this recommendation forward.

That's big of them. So don't expect them to conclude such a switch-over could take place any time soon

fairtrade

You don't really expect the OFT to be making reform if the Treasury does not benefit.

azureblue_2

Not only did my husbands recent ISA transfer take 6 weeks but there is a gap of 7 days where the money went out of this time dimension apparently because the old account closed 16th and the new opened from 23rd ......

Innys

azureblue wrote: »

Not only did my husbands recent ISA transfer take 6 weeks but there is a gap of 7 days where the money went out of this time dimension apparently because the old account closed 16th and the new opened from 23rd ......

It wasn't a time dimension. It was when your old account was closed, a cheque was written for the balance, posted (2nd class, naturally), received by the new provider and then credited to your new account.

Of course, all the while this is going on, the old provider is earning interest on YOUR money. Fair???