Help to buy bonus rejected

Knightj91

Hello,

I'd be grateful if you could take the time to read this and provide any advice you can!

I am due to complete on my house purchase on Friday 20th December. I closed my Help to Buy ISA with HSBC and got my statement, gave it to my solicitor who applied for the £1,000 bonus on my behalf.
I received an email back from the Government department advising that the bonus was rejected.

I was originally banking with Natwest and had a Help to Buy isa open with them. I contacted HSBC and asked for a full account switch. This was not in the same financial year (two years apart).

Essentially, my Natwest help to buy stayed open with 18p in the account. I wasn't aware that the natwest isa hadn't been closed down so when I tried to claim the bonus I had two open accounts and they always go with the first, of 18p ..

I understand that this may be partially my fault as I didnt read the fine print in the help to buy terms and conditions. However, the HSBC t's and c's state:

"8. Can you have more than one Help To Buy ISA?
No. You can’t hold more than one Help To Buy ISA, whether with us or another ISA manager. If you
already have a Help To Buy ISA when you open this account or if you open another Help To Buy ISA after
you open this account, you’ll only qualify for a bonus with your first Help To Buy ISA and the second Help
To Buy ISA will be void (meaning that your tax benefits will have been lost)."

Why would they allow you to open a second isa, when the wording expressly states that you're not allowed two. Why wasn't I notified that my old account hadn't been closed down? I never went back on my Natwest account because I was under the impression everything was closed, and I didnt receive any further HTB statements from natwest.

I feel as though I've been massively misinformed here, as this was supposed to be part of a full account switch.

Is there anything I can do?
Thanks for your time

stehouk

Who have you been misinformed by ?

eskbanker

Knightj91 wrote: »

this was supposed to be part of a full account switch

There's no such thing as a full account switch for ISAs, although you can advise the new provider that you wish to transfer the entire balance and it would be normal for earned but unpaid interest to be added to the transferred balance in order to zero the account before you close it.

What documentation do you have from HSBC that confirms that the entire balance (including earned but unpaid interest) was to be transferred, and did either party advise you in writing that the NatWest ISA would be closed as part of the process?

masonic

Knightj91 wrote: »

Why would they allow you to open a second isa, when the wording expressly states that you're not allowed two. Why wasn't I notified that my old account hadn't been closed down? I never went back on my Natwest account because I was under the impression everything was closed, and I didnt receive any further HTB statements from natwest.

Only HMRC can eventually find out you hold two HTB ISAs with different banks. A bank has no idea which ISAs you hold elsewhere when you open an account, which is why they ask you to make a declaration when you open the new account. But since you instructed HSBC to transfer your HTB ISA Natwest and this didn't happen in accordance with the ISA rules, it would seem that HSBC might be paying you £1000+ in compensation for the error.

Is there anything I can do?

Make a formal complaint to HSBC. They will have a copy of the transfer form and will be able to confirm that a HTB ISA was transferred and therefore the old account should have been closed down.

Since the ISA rules require that any HTB ISA that is transferred from one provider to another (where the transfer is to another HTB ISA) must be transferred in full, they don't have a leg to stand on.

Flobberchops

Was your Natwest HTB ISA closed by way of a full transfer-in to HSBC, or did you move the balance across by a standard transfer?

Rich2808

The help to buy isa strikes again!

I would have assumed the entire balance would have been transferred over for a help to buy isa - if you did submitted an ISA transfer request to a new provider - including interest and the original HTB isa closed. If this didn't happen due to a Natwest or HSBC error then the OP has a case for compensation or at least to seek redress re the lost bonus.

OP - did you do an ISA transfer request to HSBC or simply withdraw the funds from the Natwest HTB isa yourself by cheque/bank transfer (ignoring potential interest) without formally closing it and open a HSBC isa separately with the funds? If its the latter then you are probably out of luck.

Knightj91

Hi all,

Thank you for coming back to me. In all honesty, I think I opened the new HTB with HSBC and transferred the funds myself. In my naivety I thought as I'd called HSBC and asked for a full account switch that this would be OK.

The Government rule that has been quoted is:

"The Scheme Rules, page 23, 5.4 Multiple Help to Buy: ISAs (A) states that if a Non -Compliant Eligible Customer, in breach of clause 5.3 (A) (Restrictions on opening a Help to Buy: ISA), holds more than one Help to Buy: ISA at any time, the Help to Buy: ISA with the earliest Account Opening Date will be the only valid Help to Buy: ISA.
As the customer opened a Help to Buy; ISA with Natwest on the 26/04/2016 prior to opening the Help to Buy: ISA with HSBC on the 15/11/2018, and the Natwest account is still open with a small balance we are unable pay a bonus, as the amount in the Natwest account, if closed now, would not be £1600 or more which is the minimum required to be able to claim a Help to Buy: ISA bonus. Therefore this Bonus Request has been rejected."

The statement "at any time" is being used, as I had two accounts open.

I suppose what I'm getting at is, if providers of this service are aware that you cannot hold two ISA's at ANY time, they should be checking this prior to letting somebody opening a new account.

OK, maybe I should have known this, but you'd have thought that HSBC on application for a new HTB ISA would have said "excuse me Mr K, you already have a HTB ISA open and this will put you in breach". Maybe they did in size 9 writing in the 5th paragraph on the 17th page on the 7th PDF attachment to the T&C email, but it's not really enough to make customers aware.

Unsure what to do, as the last poster said - think I am out of luck as I haven't officially requested a transfer from HSBC.

Just very disappointing when you've saved for so long to be tripped up a few days before you complete on your first house.

Any advice appreciated! Thanks again

Ed-1

Knightj91 wrote: »

I suppose what I'm getting at is, if providers of this service are aware that you cannot hold two ISA's at ANY time, they should be checking this prior to letting somebody opening a new account.

OK, maybe I should have known this, but you'd have thought that HSBC on application for a new HTB ISA would have said "excuse me Mr K, you already have a HTB ISA open and this will put you in breach". Maybe they did in size 9 writing in the 5th paragraph on the 17th page on the 7th PDF attachment to the T&C email, but it's not really enough to make customers aware.

The problem is that unless you tell them, they don't know what savings accounts you hold elsewhere.

eskbanker

Knightj91 wrote: »

In all honesty, I think I opened the new HTB with HSBC and transferred the funds myself. In my naivety I thought as I'd called HSBC and asked for a full account switch that this would be OK.

[...]

Unsure what to do, as the last poster said - think I am out of luck as I haven't officially requested a transfer from HSBC.

Maybe it doesn't seem significant to you but it's important to establish the facts, in terms of exactly what you asked HSBC to do.

If you formally instructed them (by completing an ISA transfer form) to transfer your HTB ISA from NatWest then they make the necessary arrangements (which would include transferring the pro rata interest on closing) and are then responsible if it goes wrong in some way. In order to conduct this transfer, they were allowed to open a second HTB ISA for you, on the understanding that you'd be getting them to transfer in the first one prior to closing it.

However, if you simply opened a second HTB ISA with HSBC and decided to move the current NatWest balance yourself (ignoring pro rata interest earned but not paid up to that point), then HSBC are off the hook as they've done nothing wrong, and neither have NatWest.

None of this will get your bonus back but if you are able to demonstrate that HSBC have made an error then you may be able to make a complaint stick and make a case for reimbursement, but it's looking less likely that they're erred after all.

Having said all that, if you were expecting a bonus of £1,000 that would obviously imply a balance of £4,000, but if you opened a new HTB ISA in November 2018 without making a formal transfer then you wouldn't have been able to pay in more than £1,200 in the first month and therefore wouldn't have been able to reach £4,000 a year later, so something still doesn't seem right....

alandaniel132

why do you move/open HTB in HSBC?

alandaniel132

what is the reason given by government that your bonus is rejected?