Cash ISA problems with Abbey

matt@34534

I have an existing cash isa with abbey. I rang them on the 30th March to use my allowance up for the last tax year. They said fine and took £3000 by direct debit. I then recieve my end of year statement which doesnt show the £3000 i put in.I ring them back and ask what happened and they say the money didnt clear until 12th April and therefore had to go into next years allowance. After a brief discussion they say i was told it would take 5 working days to be processed and with the easter holiday that was when it cleared.I deny ever being told it would take 5 days to clear. I ring them back later to speak to a manager which they refuse to let me do so i explain the situation to the new member of staff who says exactly the same except that my money actually cleared on April 6th. I explain that i wish to cancel the transaction then as i wanted to take out a maxi isa in this tax year. They say it is not possible to cancel and that there is nothing further they can do.

Has anyone got any suggestions on what i can do or is that just the end of it and i have to except what they say?

Thanks in advance.

isasmurf

Do you have a copy of your application form? Does it say that this application is for the 2004/05 tax year? If you don't have a copy, try to ask Abbey for a copy (although I suspect this will probably cost you).

As far as I understood the rules, as long as they received your application and an instruction to pay into the account the application would be considered valid for the tax year when the application was made.
The Inland Revenue ISA Guidance notes, paragraph 5.4 says

5.4 An ISA application received near the end of the tax year (for example on the 5th April) will be regarded as opened in that tax year even where the application is not fully processed until after 5th April provided the ISA manager has accepted the application before 6th April. The ISA should be shown as opened on 5th April.

I think you seek the advice of the Inland Revenue's ISA helpline. Details here

lipidicman

Sound like a case of Abbey making problems here again!

monki_man

useless those Abbey

matt@34534

Thanks for your help isa smurrf unfortunately i do not have an application form as i tried top up my isa over the phone.

deemy2004

I don't think the application form will make any difference, as virtually all ISA providers stick a sentence in

"and all subsquent years" or somthign similar so their backs would be covered.

Consistently Abbey and A&L come up as the worst banks to do business with.... :rolleyes:

Fatboy_NSS

Your app form would have said it's valid for subsequent tax years, so the payment is valid, and unfortunately DDs do take a while to go through as the request has to go through the banking system one way and then the money comes back the other way. However all banks would have taken a similar amount of time, this isn't unique to Abbey! Unfortunately it's just a lesson not to leave it to the last minute.

MJSW

It appears to me that Abbey are in the wrong here. According to the Inland Revenue ISA guidance notes, section 6.9:

The date of subscription is
• by cheque – the date that the cheque is received and accepted by the ISA manager
• by direct debit – the date that the ISA manager is authorised to draw on the direct debit, provided that the cash transfer takes place in due course. If that date is earlier than the date the direct debit is received and accepted by the ISA manager, then the date of subscription is the later date. (but see paragraph 6.10)
• by debit card, charge card or credit card – the date authorisation is given by the investor, and
• by telegraphic transfer and standing order – the date that the subscribed funds are received by the ISA manager.

It isn't entirely clear what they mean by "the date the direct debit is received and accepted". Is this the date they receive the Direct Debit instruction, or is it the date they receive the cash from processing the instruction? For both cheque and debit card receipts, it is the date they receive the authority and not the date they get the funds, so I would assume that the same applies for Direct Debits.


However, even if they are right about the timing of the Direct Debit proceeds, in my opinion they are still wrong about you having a 2005/06 ISA. The 'subsequent years' part referred to by Deemy and Fatboy above only applies where subscriptions continue to be made every year. If you ever skip a year with a particular provider, then you need to complete a new application in order to recommence subscriptions. This is an Inland Revenue requirement. Section 4.2 of the guidance notes states:

4.2 Where a break between subscriptions lasts for a whole tax year, the investor must make a fresh application before subscriptions can re-commence.

So if Abbey are claiming that you didn't in fact make a subscription in 2004/05, then they are required by Inland Revenue rules to obtain a fresh application from you before they can accept a 2005/06 subscription. Unless you have made such an application, then in my opinion they cannot possibly have opened a valid 2005/06 ISA for you.

isasmurf

MJSW wrote:

So if Abbey are claiming that you didn't in fact make a subscription in 2004/05, then they are required by Inland Revenue rules to obtain a fresh application from you before they can accept a 2005/06 subscription. Unless you have made such an application, then in my opinion they cannot possibly have opened a valid 2005/06 ISA for you.

But the Inland revenue guidance notes also state

4.6 Where an investor has made an application to subscribe to an ISA specifying the first year of subscription, but no subscription is made in that year, the application will remain valid for a subscription in the next tax year.

5.3 An ISA begins from the date the subscription is made (paragraph 6.9), provided there is a valid application in force. The date the application is accepted should be recorded in the ISA manager’s records and may not be before the date of application. This means applications may be accepted before the tax year in which subscriptions can be made. But the ISA is not opened, and the investor is not bound by the declaration, until a valid subscription is made.

meaning no fresh application is needed if no subscription is made in the preceeding year.

MJSW

meaning no fresh application is needed if no subscription is made in the preceeding year.

It means no fresh application would be need for 2005/06 as long as a fresh application was made specifying the first year as 2004/05.

Section 4.6 which you quote is headed "No subscription made in the first year". But the question stated that this was an existing ISA with Abbey (presumably opened in 03/04 when they started offering decent rates), so 04/05 is unlikely to be the first year (unless it was opened earlier in the year with no money). If he originally applied for this ISA in 03/04, then he wouldn't have needed to make a fresh application to add more money in 04/05.

However if Abbey think he had indeed make a fresh application to subscribe in 2004/05 (by phone), then firstly they would have needed to obtain confirmation of all the points required in a written confirmation. They would also have needed to issue a written confirmation of this within 30 days. Unless Matt has forgotten receiving this, or it arrives within the next few days, then it would appear that he didn't make a fresh application in 04/05 and so would be unable to subscribe in 05/06 either.