Notice period cash ISAs

smc38

I had difficulty earlier with a 40-day notice cash ISA with Yorkshire Bank - they said notice could not be given by me, but that the 40d period was initiated when they Transfer Request by the new ISA provider.

I had my eye on a Coventry BS ISA in Jan that accepted transfers in, but all funds had to be received within 30 days of application. I wrote to YB to give my notice and requesting they await instruction from another provider regarding the transfer. They rang to say that the notice period only starts when they receive the Transfer Request from the new provider.

two points:

(1) this policy is trapping and makes the 40d notice system redundant for transfers, and so before taking out notice period ISAs we should all consider that the penalty will have to be faced at transfer. Not a warning that I have seen on the main MSE site.

(2) I'm not sure YB can say this as their T&C about transferring to another provider just say that they have to have 40d notice in writing, and furthermore the Key Facts document says:

"To transfer amounts from a Cash ISA – 40 Day Notice, you must give us 40 days notice, otherwise you will incur a charge as set out above however we can accept the 40 days notice from your new ISA provider when they send through the Transfer Request."

...which to me means that I should be the one issuing notice as the Account Holder but that they will additionally accept Transfer Request from the new provider as issue of notice.

Any thoughts? Any experience? Do I have any recourse to complain / compensation for then missing the Coventry rate that was offered?

Thanks

masonic

YB offers an instant access cash ISA, so transfer to that under the 40 day notice system, then transfer out to Coventry.

Rich2808

Al Rayan bank offer 2% on 120 days notice - admittedly its a Sharia account so its profit rather than interest technically - and its paid monthly. They also have a one year fixed rate for 1.9%

Very efficient application process - in branch or online - with internet banking and an app too.

So if you are looking to keep 2% on your funds with a relatively short notice period (i.e. 4 months) then that may be an option. You can of course access the funds immediately with a 120 day interest penalty - which still beats almost any other instant access isa.

beefturnmail

I think the notice in writing relates to if you want to withdraw the cash from the ISA, although if you had proceeded with the transfer, you could have successfully complained if Yorkshire docked your interest and the transfer was made 40 days after your letter (but not 40 days after Yorkshire received the transfer request from Coventry)

This would have been tricky to time correctly though, as the transfer form you fill in with a new provider either just gives an option for processing the transfer immediately, or waiting until any penalty period is up (which Yorkshire would have told Coventry is 40 days from when they receive the transfer request) - there is no option to 'proceed with the transfer at x date'

I also don't think you have any recourse to complain about 'missing the Coventry rate' as Yorkshire has not broken any t & c - you would have had to have taken action and then complained later (as described above)

beefturnmail

Rich2808 wrote: »

. You can of course access the funds immediately with a 120 day interest penalty - which still beats almost any other instant access isa.

Although it is a good rate, this last part is a little misleading. If you withdraw with 120 days penalty after a year say, this would work out as 1.34% which is slightly less than the best penalty free instant access ISA (1.41% - virgin), however if you withdrew within the year with penalty the effective rate would be even less (0 if you withdrew in the first 120 days).

You have to hold the Al Rayan ISA for 14 months for it to start beating the current best penalty free ISA (after you incur the 120 day penalty)

eskbanker

beefturnmail wrote: »

Although it is a good rate, this last part is a little misleading. If you withdraw with 120 days penalty after a year say, this would work out as 1.34% which is slightly less than the best penalty free instant access ISA (1.41% - virgin), however if you withdrew within the year with penalty the effective rate would be even less (0 if you withdrew in the first 120 days).

[STRIKE]The effective rate is actually negative during the first 119 days as the penalty would mean that you'd get back less than you'd paid in![/STRIKE]

Edit: scrub that, see post #8 below

xylophone

Presumably the Coventry ISA Transfer form had a box to tick which would have permitted you to request an immediate (rather than with notice) transfer?

YB would then have applied the Notice Penalty but would have transferred the balance immediately?

beefturnmail

eskbanker wrote: »

The effective rate is actually negative during the first 119 days as the penalty would mean that you'd get back less than you'd paid in!

Actually no.

15.1 of the t & c http://www.alrayanbank.co.uk/media/284825/cash-isas-special-conditions.pdf

"You can make a withdrawal or transfer out to another ISA account from your NCISA by giving us not less than 120 days written notice. However, if you request an immediate transfer out, without giving us the required notice, you will only be entitled to the full
deposit amount (if you are transferring your deposit amount in full) and the expected profit rate we pay, equal to the minimum expected profit rate product from our savings
account range, at the date of transfer out. This will be instead of the applicable expected profit rate on your NCISA for the last profit periods, equal to the required notice period on your account of 120 days."

Minimum expected profit rate they offer from their savings range is 0.05%, so it'd be 0.05% if you withdrew in first 120 days - as good as zero, but not negative.