Coventry BS cash ISA transfers

bsa629s

My wife has a Regular Saver isa (originally opened with Stroud & Swindon) with Coventry BS into which we have saved the anual allowance each year very happily. The Isa has a historical bonus that is very good by current rates (amounting to an effective rate of 3.75% [1%+2.75%]) so we are keen to keep the account.

EOY 13/14 out of the blue Coventry wrote to say that the account had exceeded a balance of 20k and that if it did it would no longer be eligable for the bonus.
We were very annoyed as this was never in the S&S terms and was never notified as a change by CBS when they took over. However we rolled over and accepted it as we wanted to keep the rate and CBS agreed to over look the minor balance overstep on this occasion.

The suggested soloution was that we open an additional account (ISA Reward) with Coventry (being the same provider) and towards the end of each tax year swept enough funds into the new account to keep the balance under 20k in the Regular Saver and allow sufficient head room for the following years savings (so maintaining an average bonusable balance as high as possible).

The rationale being the money never left the isa wrapper and stayed tax free and as was all internal to same provider did not require transfer of the entire balance so maximising regular saver average balance and bonus.

This was setup and 3Apr14 £8k (of £20.5K) was transferred over to ISA Reward and throughout 14/15 regular savings continued to bring balance+interest+bonus back to 20K in the Active Regular Saver this EOY.
The sweeper transfer was requested in good time with Coventry again this March but this morning my wife has an automated message from CBS saying the transfer failed because the ISA Reward (surplus holding acount) is inactive.

We are now unsure if the arrangements made were legal/allowable?
Did CBS do something outside the rules last year and effectively allow two active ISA's?
Their call centre staff don't seem to be able to answer and their back room staff take days to return enquiries.
Are CBS actually effectively limiting the balance of the Regular Saver account to the average of the regular saved isa limit by the backdoor (The 2.75% bonus is only payable if the account is actively saving)?

Their administration of accounts does seem particularly inept as we have had serious errors made on this and many other products with them over the last few years!

Thanks
Simon

Archi_Bald

The target ISA probably went dormant because no deposit was made into it, only a transfer sometime last year or the year before. It sounds like a mistake in Coventry's system but it's not the end of the world as ISA transfers can be made at any time. Just call them tomorrow and ask them to fix things and transfer the money.