HTB transfer to Lifetime ISA - gone wrong!

ljw2701

My daughter had a Halifax HTB Isa with approx £4300 in it - £4086 from tax year 17/18. She completed the form to transfer to her Hargreaves Lansdown Lifetime Isa stating the exact amount to be transferred as £4086 in order to maximise the govt bonus on that year's contributions and interest. The Halifax account was to be kept open to take advantage of the ongoing 3.5% interest rate. The account closure box wasn't ticked on the transfer form.


Unfortunately, Halifax have transferred the full balance and closed the account. She had already paid in £4000 to the Lifetime Isa in this tax year but this transfer has put her over the max allowed.


Halifax have said that the error is Hargreaves Lansdown's and they requested the whole amount and account closure. HL haven't responded to 2 secure messages on her online account - nearly a week now. She knows she should phone but is worried she won't put it across in the right way!


Has anyone else experienced this? What happens when someone mistakenly invests more than the acceptable limit on an ISA?


Biggest worry is that she'll lose out on the 25% govt bonus through no fault of her own.

eskbanker

ljw2701 wrote: »

My daughter had a Halifax HTB Isa with approx £4300 in it - £4086 from tax year 17/18.

Presumably what's meant here is the exact opposite, i.e. £4086 not from tax year 17/18, based on the rest of the post, which reiterates the importance of putting things across the right way?

HL are the only ones who are going to be able to resolve this so it will make sense to keep trying, does your daughter have evidence that she asked for a partial transfer, in the form of screenshots or photocopies paperwork? If it's clearly HL's error then they should accept the responsibility so your daughter shouldn't lose out on any bonus payments or interest, etc....

Alexland

I assume £4086 was the balance at 5th April 2017 relating to contributions before tax year 17/18.

I agree with eskbanker that if HL have asked Halifax for the full value to be transferred which is against the customer's instruction and as a result have caused the customer to be LISA oversubscribed for this tax year and the HTB ISA to be incorrectly closed then they should be leading with resolving the situation.

HMRC do allow ISAs to be repaired where there has been an error in administration.

I am surprised that HL have not responded to the secure messages as the general consensus on this forum is that they have excellent customer services that many believe it's worth paying the high 0.45% fee. Have you tried phoning them or asking to raise a complaint?

Please let us know how you get on with HL.

Alex.

ljw2701

eskbanker wrote: »

Presumably what's meant here is the exact opposite, i.e. £4086 not from tax year 17/18, based on the rest of the post, which reiterates the importance of putting things across the right way?

HL are the only ones who are going to be able to resolve this so it will make sense to keep trying, does your daughter have evidence that she asked for a partial transfer, in the form of screenshots or photocopies paperwork? If it's clearly HL's error then they should accept the responsibility so your daughter shouldn't lose out on any bonus payments or interest, etc....

Thanks for the replies! Yes, sorry - the £4086 is from 16/17 - what an idiot . That was the balance at 5/4/17.


Will wait to see if they respond then get her to phone if they don't - there's a month to get it sorted out! No photocopy of the transfer form but she definitely specified the exact amount.

Plus

I asked HL about partial HTB ISA transfers, and they were insistent they could only do a full transfer with closure of the sending account. When I asked what they would do in the case that a full transfer would break ISA rules (eg already deposited £4K LISA money elsewhere, wanted to only transfer previous years' HTB money to HL) they had no answer and insisted they would have to do a full transfer.

I went to Youinvest instead, whose form explicitly states all the eventualities. My 2015-Mar2017 HTB money has transferred successfully and the Halifax HTB remains open.

Can you use the 14 day cooling off period to unwind the transfer perhaps?
If phone isn't an option, write them a letter?

Plus

This are the replies from HL first time around:

Hargreaves_Lansdown wrote:

Plus wrote:

2. I'd like to make a partial Help to Buy ISA transfer from Halifax - ie not close the Halifax HTB account. Is this possible?

Unfortunately, it's not possible to partially transfer a Help to Buy ISA to Lifetime ISA. The transfer would have to be done in full.

and when I asked for clarification:

Hargreaves_Lansdown wrote:

Plus wrote:

Thanks for the reply.

How does it work if this year's LISA and HTB contributions together exceed £4000 - ie there is money in the HTB ISA that I can't transfer without breaching the rules of the LISA? I would only want to transfer funds to the LISA to keep me under the £4K limit, keeping the rest in the HTB ISA.

I can confirm that transferring current year subscriptions from a Help to Buy ISA must be transferred to the Lifetime ISA in full. As such, you would not be able to transfer this across if it exceeds £4,000. However, you are able to transfer your previous year subscriptions in your Help to Buy ISA to your Lifetime ISA.

If only full transfers are allowed, seems they aren't smart enough to refuse them if they break ISA rules.

It might be worth contacting Halifax saying you are trying to unroll the transfer, in the hope of getting your favourable account terms back again.

Alexland

The first HL response is incorrect and the second response is correct.

You are not allowed to partially transfer current year ISA subscriptions so if you try and transfer current year HTB money it might push you over the limit if you have already contributed into the LISA.

In this situation the best thing to do would be to only transfer previous year subscriptions and growth and then add the £4k yourself.

This is what the OPs daughter thinks they instructed them to do - but they didn't. I really think this mess is for HL to resolve.

Alex

bowlhead99

Alexland wrote: »

The first HL response is incorrect and the second response is correct.

I don't see that you can say that the first HL response is 'incorrect'. It is what they are telling people who ask (well, what they told Plus, and what they did to OP). So presumably it is a policy, no?

If you mean it's not correct as a matter of law and regulation that an HTB ISA can't be transferred into a LISA other than "in full with closure of the HTB"; HL are presumably only commenting on their own products that their customers are enquiring about. They're not qualified to comment on what other people might have on offer and their goal is not to set you up with a rival product. Some providers don't offer LISA funding by way of transfer in. The vast majority don't offer LISAs at all. So the "correctness" should be taken in context of their own products and policies.

This is what the OPs daughter thinks they instructed them to do - but they didn't. I really think this mess is for HL to resolve.

Well, nobody else can resolve it because HL are the ones sitting with the £8k balance in a LISA with them that contains potentially a little over £4200 of current year money when the limit is £4000. Perhaps the lack of response to the messaging implies they are looking at how to do that 'resolving'.

They will need to remedy the breach of regulations which resulted in the LISA being overfilled. Which seems to be due to them accepting some current year money as part of a transfer in, when there was no capacity to accept that current year money. Or alternatively if the transfer was instigated before the £4k deposit, the problem is that the whole £4k deposit was accepted when only some slightly lower number should have been accepted.

Either way it is not a large amount over the limit and so one would hope they should be able to unwind it and get the small amount of excess money back to the OP's bank account. Whether they have the power to force reopen the Halifax acct so that it can still be used for the good interest rate, without unwinding the whole transaction, is unclear.

If they unwind the whole Halifax transfer in and then won't accept the transfer of anything other than a 100% transfer and closure due to their own internal policies, OP would have a race against time to get a new account open elsewhere (eg AJBell) and transfer the relevant portion of the Halifax acct and all the £4k HL account, into one place. It would be easier in terms of meeting the deadline if they can just accept all the Halifax money and unwind some of the direct £4k. Though that wouldn't leave OP's daughter with a functioning Halifax account. As it would only have a couple of hundred pounds in it at 3.5% it is perhaps not a huge loss.

OP could perhaps take a look at the guidance notes for ISA managers (https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/603261/ISA_Lifetime_ISA.pdf) if they want to guess what may happen next by way of resolution.

ljw2701

Thanks for the replies. Halifax have said they won't reinstate the 3.5% interest because they aren't at fault. The plan was to save the £200 max into that every month then annually transfer into Lifetime Isa but she accepts this now won't happen & will look elsewhere for monthly savings.


That really just leaves the problem of the excess contribution to the Lifetime Isa.


I also wondered if HL were trying to resolve the issue before getting in touch. We haven't had any issues with them before - she had a Junior Isa with them which was converted to a Stocks & Shares Isa when she turned 18 two years ago. I'll try and convince her to call them this afternoon.

ValiantSon

I hope that this gets sorted for your daughter. HL's failure to provide any response is very poor. Even if the response was that they were investigating that would at least show that they were aware of the problem.

In terms of a place to save £200 per month, the obvious answer is to use one of the available 5% regular savers (e.g. Nationwide, Santander, HSBC, First Direct).

ljw2701

ValiantSon wrote: »

I hope that this gets sorted for your daughter. HL's failure to provide any response is very poor. Even if the response was that they were investigating that would at least show that they were aware of the problem.

In terms of a place to save £200 per month, the obvious answer is to use one of the available 5% regular savers (e.g. Nationwide, Santander, HSBC, First Direct).

Well. she just came off the phone from Hargreaves Lansdown and it doesn't look like they were even addressing the issue!

On the first call she was told that only a full transfer was possible - despite the form having a box to be ticked for full transfer (which wasn't ticked). She was then told that it wouldn't matter that she was over the £4000 in this tax year, took this as correct and ended the call!

Five minutes later I got her to call back for confirmation because obviously it states everywhere that the max is £4000. The second operator also said it would be fine because there is "no limit for transfers from previous years" - despite being clearly told that the amount in the HTB was £4086 at 5/4/17 and the amount in the Lifetime ISA is currently £8361 after the transfer in ie £275 over for this tax year.

As I'm writing this the second operator has called back to say he's now unsure if the information he gave is correct and he's passing it on to the transfers team!

Will obviously have to wait to see what they come back with - staffing is low because of the weather. I'm glad he called back and hopefully it'll be sorted out but we've lost confidence in Hargreaves Lansdown slightly.

Just realised she has a Nationwide current account already and can open a regular saver :T.