Transfer of cash ISA by cheque to new provider

sevenonine

I recently transferred a current year's cash ISA, whose rate had been reduced, to a new provider. This was a straightforward ISA (not fixed savings) and I had informed the current provider (CP) when filling in the form, to note that I wanted it transferred by faster payments.

I was sent an email from the CP to logon to my account and the message simply said the ISA had been closed and my instructions had been "actioned". When I called the CP to ask how the ISA had been transferred, I was told it was sent by cheque. I reminded them of my request when I was filling in the form, to note my wish it be sent by faster payment. I also asked whether the cheque could be withdrawn and the funds sent by faster payment. They replied this wasn't possible according to the rules of their society. I told them today's financial/banking transactions were all sent electronically as was the form sent to them. They said this matter would be raised as a complaint – as some kind of resolution!

My new provider said they could not help me and suggested I take it up with the CP.

This process means that a cheque sent by post, takes another 5-10 days for the funds to be available for withdrawal. With banking processes now considerably improved by faster payments, I feel I have been short-changed as this building society still seems to cling to an outmoded process.

I want to raise this issue with the relevant body so, can someone tell me whether this is the FSCS or is there a Financial Ombudsman.

badger09

I don't think you have any grounds for complaint.

Although many cash ISA providers do now transfer funds to other cash ISA providers electronically, as far as I'm aware, they are not obliged to do so.

If you wanted to withdraw some funds from your cash ISA, why did you not do that before arranging for the balance to be transferred?

Vortigern

Normally, when transferring an ISA you would instruct the new (gaining) ISA provider not the old (losing, CP) provider. Any enquiries about the progress of the transfer should be handled by the gaining bank. Have you not done it this way?

Whether the transfer is by faster payment, cheque, or carrier pigeon shouldn't matter. You should find the date of closure of the old account matches the date of deposit to the new.

The banks used to say it was done by cheque in the post because they also have to pass your subscription records to the gaining bank.

sevenonine

Vortigern wrote: »

Whether the transfer is by faster payment, cheque, or carrier pigeon shouldn't matter. You should find the date of closure of the old account matches the date of deposit to the new.

It makes all the difference: faster payment means it is in one's account by the end of the day on which it is closed! My new provider told me today the cheque has been received, and that it will take 2 days for the funds to clear - that's loss of interest for 2 days! It doesn't matter whether I wanted to withdraw funds; it's still outmoded practice and should be banned.

It irks me that some building societies still follow such practices as writing cheques when some 5 years down the line the faster payments are the norm.

HappyHarry

My new provider told me today the cheque has been received, and that it will take 2 days for the funds to clear - that's loss of interest for 2 days!

Just out of curiosity, how much money are we talking about here, and at what interest rate?

bowlhead99

sevenonine wrote: »

I had informed the current provider (CP) when filling in the form, to note that I wanted it transferred by faster payments.

I was sent an email from the CP to logon to my account and the message simply said the ISA had been closed and my instructions had been "actioned".

The actioned your request to transfer the account. You were not entitled to anything more. The new provider requested that CP transfer funds to them, and close the account, which was done.

You can "inform them" all you like when you are requesting a transfer that you think it ought to be able to go via Faster Payments for free. However, it's not a current account, and you are not paying them for the service of Faster Payments, and there was nothing in your account opening forms or terms and conditions which said they would process an outwards transfer including all the HMRC form filing and reporting in one business day, so they are entirely free to disregard your request for a service you weren't offered, as you leave them to go somewhere else.

The idea that their practices should be "banned" is silly. If their attitude to having to bring in new technology and processes to handle the enforced change of practice was to drop the interest rates by a fraction of a percent to help them afford their provision of a fancy new product, I expect you would complain about that too because it would cost you more than the couple of days of interest which you claim to have lost and probably haven't.

You could read the ISA manager guidelines to see how quickly they are required to process a transfer. The rules are written to make sure all the participating banks are able to meet the targets without falling the customer expectations which are set by the guidelines. You have, without cause, created your own expectations - which they don't need to care about, especially as you are stopping being their customer anyway.

Presumably their processes and procedures weren't important to you when you originally selected their account because it was the best rate possible or the laziest choice for you. Now you decide you want something different from the account, which was never on offer to you. Well, tough.

I want to raise this issue with the relevant body so, can someone tell me whether this is the FSCS or is there a Financial Ombudsman.

It is not the FSCS because nobody has gone bust owing you money. Indeed, you have not lost anything. Your money is safe.

Once you have exhausted the complaints process with the original provider and rejected their remedy to your complaint, you could raise it with the Ombudsman, who will tell you that the building society didn't do anything wrong, which we have already told you. Your complaint will not succeed as no rules or contracted account terms and conditions have been broken and their terms are not unfair. However, your complaint will cost the Ombudsman and the provider time and money to look into and investigate and review/ defend respectively.

As the Ombudsman is funded by all of us users of financial services, you will be costing all the MSE forum users money. So, please don't trouble the Ombudsman with a frivolous and vexatious complaint just because you erroneously think that if you were running a banking or building society business you would do it better. Thanks.

[Deleted User]

HappyHarry wrote: »

Just out of curiosity, how much money are we talking about here, and at what interest rate?

Just did a quick calculation - If the sum was £500,000 at 1%, I make it about £26. :eek:
I just paid HL £25 to transfer part of my ISA to Nationwide (by cheque), but at least Nationwide are paying me interest from when they received the application.

Vortigern

sevenonine wrote: »

It makes all the difference: faster payment means it is in one's account by the end of the day on which it is closed! My new provider told me today the cheque has been received, and that it will take 2 days for the funds to clear.

It wouldn't make any difference if the gaining ISA provider adjusted the date of receipt of your transfer. Some providers will adjust the date of deposit to match the date of closure of the old ISA. I'm not sure if all of them do.

McKneff

If.... ????

AirlieBird

sevenonine wrote: »

Vortigern wrote: »

Whether the transfer is by faster payment, cheque, or carrier pigeon shouldn't matter. You should find the date of closure of the old account matches the date of deposit to the new.

It makes all the difference: faster payment means it is in one's account by the end of the day on which it is closed! My new provider told me today the cheque has been received, and that it will take 2 days for the funds to clear - that's loss of interest for 2 days! It doesn't matter whether I wanted to withdraw funds; it's still outmoded practice and should be banned.

It irks me that some building societies still follow such practices as writing cheques when some 5 years down the line the faster payments are the norm.

You would have lost no interest. The voluntary guidelines for Cash ISA transfers agreed by the Bank and Building Society associations are that a cheque is dated with the date the funds stop accruing interest in the old account and that the new provider should backdate interest to the date on the cheque or 'day 16' of the transfer process whichever is earlier.

Also a transfer cannot be done electronically unless both the old and new provider agree.

jimjames

Sleazy wrote: »

Just did a quick calculation - If the sum was £500,000 at 1%, I make it about £26. :eek:.

Maximum you could have in a cash ISA would be around £100k so maximum would be £5. Assuming interest isn't dated from closure