Over 40s being prevented from transfering LISAs to a new provider 9 November 2021 at 3:58PM in ISAs & tax-free savings 11 replies 497 views

NICKGINSBERG

At the age of 39 when the LISAs were first introduced we signed up immediately, myself a S&S LISA, and my wife who was a bit more risk adverse a cash LISA. 5 years down the line, she has now decided that a S&S LISA would be more suitable, but have come up against a very large brick wall, with every provider including Moneybox, Nutmeg, H&L, AJ Bell and Foresters are excluding us on the basis of our age. The will happily accept transfers from LISAs for people aged under 40, but have informed us that a business decision is stopping them from allowing over 40s access to markets and causing us material inconvenience as we are losing out on financial returns. I cannot see how the financial ombudsman can sit back an allow providers to discriminate against people because of their age? Is this something others have come across? Do we need Martin to champion our cause?

dunstonh

I cannot see how the financial ombudsman can sit back an allow providers to discriminate against people because of their age?

Technically, a LISA is all about age discrimination.   

However, I suspect there is some confusion going on here with what they are saying and what you are saying.  HL, for example, do allow you to invest beyond age 40.  However, their FAQ says they cannot currently accept transfers from other Lifetime ISAs.



When you are aged over 40, I believe you have to either contribute to the existing provider or transfer the existing one first before you can then add to the new one.     

eskbanker

This comes up fairly regularly on here, and in one of the more recent threads, the subject of whether or not it could legitimately be construed as unlawful discrimination was raised:

https://forums.moneysavingexpert.com/discussion/6290953/lisa-after-40/p1

The scheme itself (as with many others) has age-related terms, which weakens the discrimination argument for me when applied to specific products, as ISA providers are already permitted to elect not to accept transfers, so there is an argument that it's legitimate for a provider to only accept transfers if the consumer was eligible to open a new account. 

However, that's not to say that the ombudsman would see it that way, but the ombudsman service only responds reactively to individual cases and it's the regulator (FCA) that has the oversight about how regulated companies operate.

That thread highlighted some recent press attention but I'm not aware of it being on the MSE radar - however unfair it might be, it is a fairly niche problem not affecting huge numbers (relative to more significant industry issues)....

eskbanker

dunstonh said:

When you are aged over 40, I believe you have to either contribute to the existing provider or transfer the existing one first before you can then add to the new one.

The issue is that there aren't any S&S LISA providers accepting LISA transfers from over-40s.

Edit: actually, one was claimed (with IFA assistance) in one of the previous threads at https://forums.moneysavingexpert.com/discussion/comment/78661075/#Comment_78661075

dunstonh

eskbanker said:

dunstonh said:

When you are aged over 40, I believe you have to either contribute to the existing provider or transfer the existing one first before you can then add to the new one.

The issue is that there aren't any S&S LISA providers accepting LISA transfers from over-40s.

Edit: actually, one was claimed (with IFA assistance) in one of the previous threads at https://forums.moneysavingexpert.com/discussion/comment/78661075/#Comment_78661075

I can confirm Transact do it.  However, they are an intermediary platform.  No DIY.

Alexland

dunstonh said:

I can confirm Transact do it.  However, they are an intermediary platform.  No DIY.

Would it be possible for an IFA to setup a transfer and regular contribution into a Transact LISA account invested in a multi asset fund on a transactional rather than ongoing basis? If so even after paying a setup fee that might be better for someone than getting stuck with a Cash LISA for nearly 20 years.

dunstonh

Would it be possible for an IFA to setup a transfer and regular contribution into a Transact LISA account invested in a multi asset fund on a transactional rather than ongoing basis?

Yes.

If so even after paying a setup fee that might be better for someone than getting stuck with a Cash LISA for nearly 20 years.

It's a cheap transaction for an IFA if you catch them during a quiet point or if there happens to be a IFA that deals with the whole family.   If you ask them at a busy time and there is no family IFA then it may be harder to find one.

Thrugelmir

eskbanker said:

This comes up fairly regularly on here, and in one of the more recent threads, the subject of whether or not it could legitimately be construed as unlawful discrimination was raised:

https://forums.moneysavingexpert.com/discussion/6290953/lisa-after-40/p1

The scheme itself (as with many others) has age-related terms, which weakens the discrimination argument for me when applied to specific products, as ISA providers are already permitted to elect not to accept transfers, so there is an argument that it's legitimate for a provider to only accept transfers if the consumer was eligible to open a new account. 

However, that's not to say that the ombudsman would see it that way, but the ombudsman service only responds reactively to individual cases and it's the regulator (FCA) that has the oversight about how regulated companies operate.

That thread highlighted some recent press attention but I'm not aware of it being on the MSE radar - however unfair it might be, it is a fairly niche problem not affecting huge numbers (relative to more significant industry issues)....

Given their relative size. Companies will simply argue that it's not economic to provide the ability to transfer.  Simply not cost effective. 

eskbanker

Thrugelmir said:

eskbanker said:

This comes up fairly regularly on here, and in one of the more recent threads, the subject of whether or not it could legitimately be construed as unlawful discrimination was raised:

https://forums.moneysavingexpert.com/discussion/6290953/lisa-after-40/p1

The scheme itself (as with many others) has age-related terms, which weakens the discrimination argument for me when applied to specific products, as ISA providers are already permitted to elect not to accept transfers, so there is an argument that it's legitimate for a provider to only accept transfers if the consumer was eligible to open a new account. 

However, that's not to say that the ombudsman would see it that way, but the ombudsman service only responds reactively to individual cases and it's the regulator (FCA) that has the oversight about how regulated companies operate.

That thread highlighted some recent press attention but I'm not aware of it being on the MSE radar - however unfair it might be, it is a fairly niche problem not affecting huge numbers (relative to more significant industry issues)....

Given their relative size. Companies will simply argue that it's not economic to provide the ability to transfer.  Simply not cost effective. 

That's no defence against acting unlawfully though, if that was the basis of a challenge to their policies!  However, those policies do seem to vary - as above, HL have a blanket policy of not accepting LISA transfers (so no age discrimination there), whereas AJ Bell do accept them but not for over-40s, claiming that this is a essentially a technical shortcoming of their systems rather than a conscious business decision....

Thrugelmir

eskbanker said:

Thrugelmir said:

eskbanker said:

This comes up fairly regularly on here, and in one of the more recent threads, the subject of whether or not it could legitimately be construed as unlawful discrimination was raised:

https://forums.moneysavingexpert.com/discussion/6290953/lisa-after-40/p1

The scheme itself (as with many others) has age-related terms, which weakens the discrimination argument for me when applied to specific products, as ISA providers are already permitted to elect not to accept transfers, so there is an argument that it's legitimate for a provider to only accept transfers if the consumer was eligible to open a new account. 

However, that's not to say that the ombudsman would see it that way, but the ombudsman service only responds reactively to individual cases and it's the regulator (FCA) that has the oversight about how regulated companies operate.

That thread highlighted some recent press attention but I'm not aware of it being on the MSE radar - however unfair it might be, it is a fairly niche problem not affecting huge numbers (relative to more significant industry issues)....

Given their relative size. Companies will simply argue that it's not economic to provide the ability to transfer.  Simply not cost effective. 

That's no defence against acting unlawfully though, if that was the basis of a challenge to their policies!  

Probably why the number of providers offering LISA's is restricted. Administratively too much hassle for the volume of business generated. 

Alexland

Thrugelmir said:

Given their relative size. Companies will simply argue that it's not economic to provide the ability to transfer.  Simply not cost effective. 

£4+1k per tax year quickly adds up and after just a few tax years ours have grown to nearly £35k each and if we keep contributing until 50 then I would expect they should together be worth a few hundred thousand at 60.