A shares ISA closed without my permission

lucasoid

and the money returned to my bank account.

I cancelled the direct debit for an investment trust ISA and at the same time put in an application to transfer the ISA.

At this point I sold the shares within the ISA - leaving the balance of £14,000

Just wondering what the next step would be?

That ISA - is now gone forever and the returns on that money would have been tax fee for the next 20 + years.

I have been putting the full amount into ISAs each year and am going to continue to do this.

What do you think?

Archi_Bald

lucasoid wrote: »

and the money returned to my bank account.

I cancelled the direct debit for an investment trust ISA and at the same time put in an application to transfer the ISA.

At this point I sold the shares within the ISA - leaving the balance of £14,000

Just wondering what the next step would be?

That ISA - is now gone forever and the returns on that money would have been tax fee for the next 20 + years.

I have been putting the full amount into ISAs each year and am going to continue to do this.

What do you think?

How and when did you ask for the transfer, what is to be transferred, from whom to whom? Who did you send your transfer application to?

Who closed your ISA?

bowlhead99

Some providers will apply their interpretation of the HMRC rules around 'an investment ISA isn't supposed to hold cash' in quite a draconian way.

While you can sell out of one fund to buy into another in their range, they may interpret you stopping your subscriptions and 'cashing up' as meaning you want your cash back to your nominated bank account, if their T&Cs say they'll do this. Certainly there are some investment trust plan T&Cs that say if you do a transfer in to them and then cancel your request to use the cash to buy shares, they will just dump the cash back to your bank account as cash and then you've lost the ISA protection forever.

Usually if you want to transfer out you would simply tell the transferee provider to contact your old provider and request they do a transfer of stock or in cash, and it gets handled by a formal process. If you just request to cash in your chips and then some time passes before they hear any other ISA manager knocking at their door asking for cash or assets to be transferred, maybe they would have given up waiting, not knowing what was going on. Did you tell them what you were trying to accomplish? Similarly when you say you cancelled the direct debit, was that by telling them or by doing it with your bank so that from the ISA manager's end it looked like the direct debit requests were bouncing?

You ask what the next step would be - what happened when you complained that you'd lost some tax benefits forever? I assume you've done this? Did they say they were just following their own procedures and terms and conditions? Or did they have some other response?

Typically if you complain and they give you an unsatisfactory final response that doesn't show that they should have done what they did, you can take it to the Ombudsman.

Clearly you have lost a benefit - but if that is your fault because you didn't follow their standard procedure for transferring out and you triggered some sort of 'repay the exiting customer in cash' procedure which they would do to people in your situation with good reason... you may not be able to do anything about it.

Archi_Bald

bowlhead99 wrote: »

Some providers will apply their interpretation of the HMRC rules around 'an investment ISA isn't supposed to hold cash' in quite a draconian way.

This rule no longer exists since July 1 2014.

dunstonh

What do you think?

More important is what the ISA manager thinks and what they are doing about it once you have raised it with them.

Was it a mistake by them?
Was it a badly worded instruction from you?
What have they said about it?

jimjames

At least if its your mistake you have a new limit of £15k this year so can fund a new ISA. Or if already used then.you have from next April available instead.

lucasoid

dunstonh wrote: »

More important is what the ISA manager thinks and what they are doing about it once you have raised it with them.

Was it a mistake by them?
Was it a badly worded instruction from you?
What have they said about it?

Thanks for the replies!

I am still waiting for their response.

I sent no instruction to them personally for transfers or anything - only spoke to someone regarding the cancellation of a direct debit.

I sold stock through an online account - leaving the cash amount.

So I will get back when they get back.

noh

Who was the provider?
I have just read the T+Cs for F+C investment trust ISA.
They return the sale proceeds to you if you just sell a trust.
You can sell and purchase another trust in their range as one instruction
If you wish to transfer the ISA you put in a transfer request to the new provider and choose to transfer in specie or cash.
Perhaps your provider operates in the same way?

http://www.fandc.com/documents/pip-and-investment-trust-key-features/

bowlhead99

noh wrote: »

Who was the provider?
I have just read the T+Cs for F+C investment trust ISA.
They return the sale proceeds to you if you sell.
You can sell and purchase another trust in their range.
If you wish to transfer the ISA you put in a transfer request to the new provider and choose to transfer in specie or cash.
Perhaps your provider operates in the same way?

http://www.fandc.com/documents/pip-and-investment-trust-key-features/

That is similar to Aberdeen I think, though I no longer have a direct holding with them. But I think that's where I'd seen them talk about what happens if you instruct them to go get some cash from another ISA to support a share purchase that you subsequently cancel - they warned that they'd kick the cash back to your bank account and you'd lose your ISA protection forever. Maybe it was a different provider I was thinking about but they didn't want to be managing your uninvested cash.

Post 1 July '14 some groups may have a different attitude to holding uninvested cash, and maybe even be building specific products around it, but just because HMRC allows them to hold the cash it doesn't mean they will change their attitude to holding it and their related procedures that they trained their staff on.

Hopefully if you gave instructions about cancelling the direct debit you recorded your own call for 'quality and training purposes' - if not, hopefully they did and can share with you, but probably unlikely...

Do come back with the update when you have it.

colsten

bowlhead99 wrote: »

Post 1 July '14 some groups may have a different attitude to holding uninvested cash, and maybe even be building specific products around it, but just because HMRC allows them to hold the cash it doesn't mean they will change their attitude to holding it and their related procedures that they trained their staff on.

No provider has the right to move funds (money) out of your ISA wrapper without your permission. If they can't / won't hold cash, they must give you the option to transfer the cash to a provider who can and will.

colsten

lucasoid wrote: »

I cancelled the direct debit for an investment trust ISA and at the same time put in an application to transfer the ISA.

lucasoid wrote: »

I sent no instruction to them personally for transfers or anything - only spoke to someone regarding the cancellation of a direct debit.

so who got the application to transfer, and what did they do with it?