Skipton LISA Compensation for Transfer Mistake

22looking

Hi all,

I’m looking for some advice/help please.

I had a Skipton LISA with £4000 in it and also a Halifax H2B ISA with £5281 in it.

I completed a transfer request for Skipton to transfer £3481 from my Halifax H2B ISA into the LISA. This would leave £1800 in the H2B ISA, which is the amount I had paid into it in this current tax year 17/18.

Unfortunately, Skipton made an error and requested the full amount from my H2B ISA be transferred to them and for the H2B ISA to be closed. I now have an oversubscription of £1800 in my LISA and my H2B ISA account has been closed.

Skipton have admitted to the mistake and they and I have spoken to Halifax, but Halifax say they are unable to reopen my H2B LISA so I can't put the £1800 back in to it.

I have now lost the 3.5% tax free ISA I had with Halifax. Skipton have offered me £60 to cover the interest I would have earned on the £1800 (if it was still in the H2B ISA) and another £20 to cover phone calls etc. I have received the £80 cheque for this but I wanted to check first if this was fair compensation?

I also wanted to ask advice on what’s now best to do with the £1800? Skipton have offered to transfer it to the LISA I have with them after April 5th 2018. I wondered if I should open another H2B ISA to put it in as the interest rates are better than Skipton's 0.75%. Halifax don’t offer the 3.5% interest rate I had with them but Barclays have a 2.5% H2B ISA. I could open that and put £1200 in and then £200 over the next 3 months. Do you think it's just easier to let Skipton put it into the LISA?

Just so you know why I wanted to keep the H2B ISA active: The total I can afford to save a month is £400, so I had planned to put £333 into the LISA (£4000 total for the year) and £67 into the H2B ISA each month. I was going to collect the bonus on the LISA not the H2B ISA when it came time to purchasing my first home.

If anyone has any advice on the compensation payment from Skipton and/or what I should do with the £1800 I would be most grateful.

Thanks so much in advance

bowlhead99

22looking wrote: »

I have now lost the 3.5% tax free ISA I had with Halifax. Skipton have offered me £60 to cover the interest I would have earned on the £1800 (if it was still in the H2B ISA) and another £20 to cover phone calls etc. I have received the £80 cheque for this but I wanted to check first if this was fair compensation?

Seems fine unless you believe the time you spent dealing with their mistake is worth more than £20. Even if it is, they are paying you an entire year's worth of 3.5% interest on £1800 when you can put that money in another account elsewhere and earn interest on it, so some of the money they are paying you is for interest you haven't even lost. So that seems adequate compensation.

Just so you know why I wanted to keep the H2B ISA active: The total I can afford to save a month is £400, so I had planned to put £333 into the LISA (£4000 total for the year) and £67 into the H2B ISA each month. I was going to collect the bonus on the LISA not the H2B ISA when it came time to purchasing my first home.

You mention you were going to put £67 into the H2B each month and put the rest of your £400pm in Skipton. However, the rate in the H2B is quite a bit better than Skipton so the sensible thing to have done would be to keep maxing out the H2B at £200pm and put less into Skipton, and only move the rest of the £4k limit into Skipton at the end of the year.

By loading up the H2B account over the next year with another £200pm, that 'new money' (2018/19 contributions)would have ticked up from £0 to £2400 in the account on the course of the year, with an average of a little over £1200, before taking it out. At 3.5%, the interest earned on that new money over the next year would be less than £50. Instead of doing that, you could instead be doing your £200pm saving in a Regular Saver account with one of the banks or building societies that offer them at good rates. Nationwide's one pays 5% on up to £200pm for example and is instant access so you can withdraw the money whenever you want, to put it into the LISA account towards the end of next tax year. You would earn more money at 5% with Nationwide than at 3.5% with Halifax.

I also wanted to ask advice on what!!!8217;s now best to do with the £1800? Skipton have offered to transfer it to the LISA I have with them after April 5th 2018. I wondered if I should open another H2B ISA to put it in as the interest rates are better than Skipton's 0.75%. Halifax don!!!8217;t offer the 3.5% interest rate I had with them but Barclays have a 2.5% H2B ISA. I could open that and put £1200 in and then £200 over the next 3 months. Do you think it's just easier to let Skipton put it into the LISA?

I wouldn't mess about with a new account at Barclays for 'only' 2.5%.

The obvious choices are:
- if you can be bothered opening a new account to earn better rates of interest, get a flexdirect current account with Nationwide which pays 5% on amounts up to £2500. That also entitles you to the aforementioned regular saver account paying 5% on deposits up to £250pm for up to a year.

- whereas, if you can't be bothered opening new accounts with new financial institutions for better interest, just stick it in Skipton. Or the best account from whatever other banks you use, which has the best rate on that amount of money, making sure you move it to Skipton before the end of the tax year.

There doesn't seem to be any point doing a middle ground of opening up an account with a new financial institution like Barclays that doesn't pay top rates, when you are not going to use the 'features' of the H2B bonus anyway. Either you can't be bothered with new accounts, so just use skipton and forget getting the best rates; or you can be bothered with new accounts, so open one at somewhere like Nationwide. Lots of other places have decent deals on interest-paying current accounts and/or linked regular saver accounts.

If anyone has any advice on the compensation payment from Skipton

It's fine. Cash the cheque.

and/or what I should do with the £1800 I would be most grateful.

As above.

22looking

Thank you so much for this advice, I really appreciate it! I think I will go with opening up an account with Nationwide as suggested.
Huge Thanks