Bank unwrapped some of my ISA by mistake

tell_it_how_it_is

Not exactly the same situation, but a few years ago Abbey recalled a transfer of £3600 into a NatWest ISA, as they decided it looked like a fraudulent transaction.

I tried to put it back, and NatWest rejected it, saying my allowance had been used and there was nothing they could do about it.

I then contacted Abbey, who sent me a letter to confirm it was their mistake, and after I sent this to the NatWest, the latter then did accept the amount being added back in.

So they certainly can and are able to sort these things out.

Macca83_2

If the bank has made the mistake of removing funds from an isa, they do have the ability to rectify the problem. Getting someone with the experience or know how to do it, is the difficult part. The majority of telephone banking staff won't have the authority to deal with such a request and it would really need to be referred up the ladder.

Don't let the compensation payment put you off. The only solution to the situation is to have the funds reinstated, your interest back dated and a redress payment for inconvenience caused.

Newly_retired

DH's bank made a similar mistake and instead of moving funds within an ISA moved them into ordinary savings. After some hassle on the phone they did put it back into the ISA. So it can be done.

MarkyMarkD

A lot of the comments on this thread are confusing.

What happened here is nothing to do with a bank processing a withdrawal from an ISA in error and those sections of the HMRC ISA guidance are not relevant.

What happened here, is that banks are allowed to open ISAs on a provisional basis, where they have incomplete information, but then they are required to close the ISA if they do not complete the information within 30 days.

Obviously in this case, there was no reason for them to close the ISA as they did hold everything they required.

I do not accept their understanding that they cannot backdate the ISA. You sent them the money in the right tax year; you made the necessary declarations. The only mistake was theirs in not completing their own forms properly.

Insist on them opening the ISA for you, backdated to 2011/12.

cg54321

Many thanks for all the comments and suggestions.

I just logged into my online account and the money has turned up back in the isa and the cheque they sent me has been cancelled (and didn't cash it in), there is also 113 pounds additional interest in there.

I have not had a chance to speak to the bank since my earlier messages here and have only had a letter to say they are looking into my complaint. Do not yet know if it has gone back in under last years tax allowance (but assume so as I have not yet decided where I want to put this ISA allowance, and certainly don't want them to make that sort of decision for me!).

So at least they appear to be trying to sort it out and I will wait for their letter explaining these last events. It seems leaving them to sort out the mess they have made of my ISA may be working (but I won't hold my breath!).

I will leave an update here with the final outcome.

innovate

That's encouraging news for you, cg54321! Thanks for coming back with an update. Hopefully it won't be too long now until they rectify the problems they created.

What dates are shown against the transactions? As you say, it is quite critical they don't use your current year tax allowance to correct their error.

Does £113 interest sound like the right amount of money to you? Do you think it might include a (too?) small amount of compensation?

cg54321

Hi innovate,
I'm not sure what the 113 pounds is related too, as my account looks a bit confusing now as some interest was added to the money as it was removed and that too is now the account. It may be they added the interest for the rest of the money in the account (as there are my ISA contributions from a few years before in that same account, although that is not due at that moment). I asked for a full breakdown of all calculations related to my account, so hopefully I'll get this information... Otherwise it is going to a bit complicated to check I'm getting the correct interest and what is compensation.
And it is not clear which year it has gone back in under...

glider3560

I had a similar issue where a bank made an administrative error, resulting in loss of my ISA allowance.

This was when £3000 was the maximum subscription and interest rates were more than 6%.

They offered £220, which I refused. After intervention by the first stage of the FOS, they offered an additional £50, which I accepted. So total compensation was £270.

Basically, their first offer was based on 6 years worth of tax. In reality, it has worked out at many more years as interest rates have gone down.