Premature Cash ISA transfer -take great care!!

varndeanian

I had a fixed rate cash ISA with the Scarborough BS (which later became the Skipton) at a rate of 6.05%. This year I was desperate to reduce the number of cash ISAs I hold so I decided to transfer two of my soon to expire ISAs to Santander, at the same time as I opened a Santander one at 3.5%. Previously I had been wary of transferring but had been peruaded by national publicity that it should be a straightforward process and the 'standard' HMRC form (as used by most providers) with its options appeared clear to me.

On the Santander transfer form I selected the statement "Where a period of notice is required for closure/part transfer of the existing cash ISA I give my consent to Serve the full notice period before this instruction can be processed". I was therefore shocked when I found that Skipton had transferred the ISA immediately, resulting in a significant loss of interest.

When I complained Skipton replied that "the product Terms and Conditions never provided the option of a notice period only that any withdrawals, or closure, would be subject to a 120 day penalty". The Financial Ombudsman Service has now confirmed that they fully support Skipton's rejection of my complaint. In response to my opinion that Skipton should have consulted me before effecting the transfer the FOS states that they are not a regulator (e.g. able to recommend changes to business procedures, practice etc.) Its role is to investigate whether a business has made an error - and they believe no error has been made.

:mad::mad: Any ideas please on further action I can take and, just as importantly, to make sure others do not fall into a similar trap?

Baldur

Whenever I've transferred fixed rate/term Cash ISAs in the past, I have always instructed that the transfer should take place 'on maturity' and included the maturity date on the ISA transfer form in addition to selecting the 'notice period' statement.

varndeanian

Excellent tip Baldur. Won't get caught again but does anyone know how I should draw this issue to the Regulator's attention? Surely the transfer form agreed between HRMC and the industry needs at least one extra option added.

Baldur

varndeanian wrote: »

Excellent tip Baldur. Won't get caught again but does anyone know how I should draw this issue to the Regulator's attention? Surely the transfer form agreed between HRMC and the industry needs at least one extra option added.

The Cash ISA transfer form suggested in the HMRC Guidance Notes to ISA Managers 2008 (Section 11.34) doesn't even contain the option to serve any required notice prior to the transfer - this may have been modified by subsequent consultation/ISA Bulletins but not in the original layout.

varndeanian

I found a more recent version which does include the second option (will try to dig it out again) but interestingly Skipton themselves still use the version you are referring to when investors wish to transfer to them.
Also in the later version of the guidance it stresses that both the old and the new provider need to be very clear about the investor's wishes/intentions. Presumably Skipton, as the fourth biggest building society now, signed up to this.

varndeanian

I've now found the updated 2008 version. It's at www. hmrc.gov.uk/isa-bulletin 3 and is dated 27 August 2008. Very detailed with lots of good practice issues highlighted.

Sorrry that, as a new member, I'm not allowed to post any links.

Baldur

Thanks for that - I'm sure that I have it bookmarked on my main PC but am currently using a spare Linux box for testing purposes.

For anyone else interested, the link is http://www.hmrc.gov.uk/isa/isa-bulletin-3.pdf

Milarky

The problem with pointing out the shortcomings of HMRC is they aren't the ones responsible for this are they? Skipton/Scarborough had a product which did not (it seems) allow notice to be given - because it only allowed no-notice-with-penalty notifications. Whilst this might be acceptable for taxable savings - where the withdrawal is not subject to the possibility of (third party notified) 'transfer' - only (customer notified) withdrawal - it must, surely, not be deemed an acceptable term where ISAs are concerned and the customer is required to use third party notification?

I'm assuming the account was set up to 'revert' to instant access type on maturity. But simply because the ability to give notice was not specified as an Account Specific term and condition does not (surely?) mean that the notice may not be given - and therefore that which you did give (general though it was) may not be deemed as an actionable 'instruction'?

Have you gone back to Scarborough's 'General Terms and Conditions' I wonder? If it doesn't say something there about 'customer instructions' I would be most surprised?

If something like that is there, and FOS simply hasn't looked in that direction then don't take their 'final decision' as meaning they can't take a second look now. If you can find some serious procedural error (possibly of the kind I have indicated) committed by an the Adjudicator or Ombuds-drone which would have led to a different conclusion then follow my example and complain to the Chief Ombudman in-person - rather than use the 'Service Review'. Because they will so want to avoid her becoming involved, that they can choose meet your original claim fully out of their own pocket (Scarborough/Skipton being exempt at this stage) by inviting you to withdraw your personal complaint in return for such a consideration.

[How do the general T&Cs stack up I wonder?]

G_M

This may be an unpopular view but my feeling is that customers, ie us!, have to show some responsibility for our own finances. And that includes understanding the products we buy, invest or save in.

In this case, the ISA from which the OP wished to transfer apparantly had a high interest rate in return for a lock in (very common). I am not familiar with the specific product myself, by the OP says: "any withdrawals, or closure, would be subject to a 120 day penalty".

If that is indeed a condition, the OP should have either expected the loss of interest, specified the date for the transfer (ie when the ISA "expired" [matured?]), or waited till maturity.

If confused, OP could have contacted the ISA provider for clarification.

varndeanian

G_M wrote: »

This may be an unpopular view but my feeling is that customers, ie us!, have to show some responsibility for our own finances. And that includes understanding the products we buy, invest or save in.

In this case, the ISA from which the OP wished to transfer apparantly had a high interest rate in return for a lock in (very common). I am not familiar with the specific product myself, by the OP says: "any withdrawals, or closure, would be subject to a 120 day penalty".

If that is indeed a condition, the OP should have either expected the loss of interest, specified the date for the transfer (ie when the ISA "expired" [matured?]), or waited till maturity.

If confused, OP could have contacted the ISA provider for clarification.

Yes G_M I am now 'wise after the event' and, as I stated earlier, obviously should have done as Baldur suggested and stated a date for transfer.

However its a bit harsh to point to the need to "show some responsibility for our finances". There seem to be a lot of posters here who already have a great deal of knowledge on the subject but I've had serious difficulty in finding 'user friendly' information. Even Martin Lewis' posts do not go into detail about the transfer process including my particular pitfall.

You obviously consider me very stupid but it never occurred to me that the box I ticked did anything other than meet my requirements i.e. I thought a notice period included the completion of the contract. Otherwise I would have ticked as follows " Proceed immediately with the transfer and bearing any consequential penalty which may be applied". As the form I signed followed the HMRC model I believed it covered all eventualities.

As I didn't envisage a problem I didn't contact Skipton either; but of course it wasn't in their interest to contact me to clarify my expectations was it, despite - as I now know - the Guidance to ISA managers suggests that both the old and new providers need to be clear about the investor's wishes.

varndeanian

Thank you Milarky for suggesting another approach. Later, in the cold light of day, I'll see whether there is anything more in the Ts & Cs which might be of value