e-ISA closed by Northern Rock

professorhat

Sorry if this is a noddy question, have only just got into the world of ISAs and a quick search hasn't yielded a response on this.

I opened a Northern Rock e-ISA a few months ago, with the intention of saving the my full allowance of £5,340 by next April. I had a monthly payment going straight in from my current account for this.

Yesterday, I received a letter from Northern Rock telling me this ISA was now a closed issue and I couldn't make any more payments into it, with a cheque enclosed for the amount which had been debited at the beginning of the month. A quick look at the details shows I only managed to save £2,000. The letter says I can make no further deposits into this account, nor can I open another cash ISA.

I phoned them, assuming this must be a mistake, but to my surprise was told that in the Ts and Cs, they were not only able to do this, but they could also do this with absolutely no notification. I don't doubt their legal position, but I made it quite clear I wouldn't be using their services again, if this was deemed an acceptable way to treat customers.

I have to say, I'm completely baffled by this - is this standard practice with all ISA providers? If so, how on earth can you guarantee the ability to save the full amount each year, if they can just close the account at any time and prevent you making any more savings?

Thanks for any advice!

agrinnall

Seems a bit of an odd thing for them to do but it does look like it's happened, they now have an e-ISA at 2.8% rather than the previous 3.05% (fortunately I topped mine up to the full amount just before the end of October so I'm hoping it'll stay there).

However, all is not lost for you. There is still the option of opening another current year ISA, but you must transfer all of the contents of your NR ISA - the new NR issue says you can do this, or if you want to take it elsewhere many other providers will allow it.

Edit - The MSE Top Cash ISA guide still shows the NR ISA at 3.05%, clearly that's now out of date and the other top ISA, from the AA, doesn't allow transfers in so is no good for you.

Funkyfreddy

professorhat wrote: »

....

I phoned them, assuming this must be a mistake, but to my surprise was told that in the Ts and Cs, they were not only able to do this, but they could also do this with absolutely no notification......

Make sure you are aware of the T&C of any product; they wouldn't do it unless it was within the T&C's at the time of opening - if it wasn't there to start with they wouldn't change the conditions without notification but its not unusuall for some Fixed Rate products to be open for a limited period of time when deposits can only be made during this "window" or are even a "One time" deposit.

Take a look at the current N.Rock Fixed Rate Cash ISA's which have:

"From account opening you will have a minimum of 30 days to deposit funds "

http://www.northernrock.co.uk/savings/find/results/all/

There is a similar thread from recent days with regard a NatWest product:

https://forums.moneysavingexpert.com/discussion/3598729

There are some T&C's though that don't always help themselves: the Dunfirmline for example have a Fixed Rate Cash ISA for which the T&C initially state:

This product may be withdrawn without notice, after this time you will no longer be able to make further deposits into your account

However it later states:

Additional deposits only whilst account remains open, subject to maximum subscription under the ISA regulations. However, if this is your only Cash ISA for the current tax year 2011/2012, and you have not used your full ISA allowance, we will allow you to top up to the full subscription limit, even when the product becomes a closed issue, providing you have invested the minimum amount.

FF.

johnk

agrinnall wrote: »

Seems a bit of an odd thing for them to do but it does look like it's happened, they now have an e-ISA at 2.8% rather than the previous 3.05% (fortunately I topped mine up to the full amount just before the end of October so I'm hoping it'll stay there).

Edit - The MSE Top Cash ISA guide still shows the NR ISA at 3.05%, clearly that's now out of date and the other top ISA, from the AA, doesn't allow transfers in so is no good for you.

Still showing 3.05%?
http://www.northernrock.co.uk/savings/find/savings-accounts/Online_E_ISA/?utm_source=MoneySupermarket&utm_medium=ListingsOnlineISA&utm_campaign=Savings

agrinnall

johnk wrote: »

Still showing 3.05%?
http://www.northernrock.co.uk/savings/find/savings-accounts/Online_E_ISA/?utm_source=MoneySupermarket&utm_medium=ListingsOnlineISA&utm_campaign=Savings

I think they must be a bit slow cleaning up their website, I suspect if you tried to open one of these it wouldn't work. In their list of Cash ISAs the only non-fixed rate e-ISA is the Issue 2 at 2.8% http://www.northernrock.co.uk/savings/find/savings-accounts/E_ISA_Issue_2/

johnk

agrinnall wrote: »

I think they must be a bit slow cleaning up their website, I suspect if you tried to open one of these it wouldn't work. In their list of Cash ISAs the only non-fixed rate e-ISA is the Issue 2 at 2.8% http://www.northernrock.co.uk/savings/find/savings-accounts/E_ISA_Issue_2/

The 3.05% online e-ISA was an exclusive with moneysupermarket.com and was never shown in their saving list, as far as I can remember.

agrinnall

johnk wrote: »

The 3.05% online e-ISA was an exclusive with moneysupermarket.com and was never shown in their saving list, as far as I can remember.

Well I got one and didn't go through moneysupermarket.com. As I mentioned previously it's still listed in the MSE Top Cash ISAs and there's no suggestion there that it can only be got through moneysupermarket.

http://www.moneysavingexpert.com/savings/best-cash-isa

Edit: Actually, you could be right, I just clicked on the MSE link and it does briefly go through moneysupermarket.com, although if you blink you'd miss it. However, given that the OP has a letter from them to say it's closed I still suspect that it's no longer possible to open one, but because I already I have one I'm not going to try another!

AirlieBird

While your all talking about the variable rate ISAs I suspect the OP opened a Fixed-Rate e-ISA, as these are the only ISAs that NR have where deposits can be made while the Issue remains open.

In this case OP I am afraid that it is standard practice for fixed rate accounts anywhere.

I encourage all people that get themselves in this position to raise this issue with HMRC and their MP. I believe the Government should insist that all providers that offer these sort of accounts must either highlight very clearly in the application process that you will not be able to use any unused allowance once the issue has closed, or, my preferred solution, that another ISA account must be offered for you to use up your full allowance.