Loosing more than I have earned in interest when transferring an isa

Eyeful

Perhaps there is Curdy said:

Firstly many thanks for everyones who took the time to research and respond. Really appreciated. The new ISA is now set up and money transferred so there is no going back. In terms of my alleged wrongdoing by Coventry, I have always assumed that you could only loose the accrued interest, not part of the principle. I don't think this was made clear to me by Coventry. Other investments make it very clear that the principle sum is at risk and can be lost. Coventrys ISA did not. Also, the penalty charge (close to £400) bears no relation to their costs or losses, so is disproportionate and therefore unfair.

(a) "Stocks & Shares ISA": This is where your investment is at risk. You are paid a dividend.
 On top of this you have to pay fees and charges.
(b) "Savings Cash ISA". The savings are "safe" but are at risk to inflation. You are paid interest.
If you do not meet the terms & conditions of the account, you are charged the equivalent of so many days loss of interest. If the charge is larger than the interest you have accrued, the balance is deducted from the savings. 

Your answer suggests that you did not understand the difference between the two.

isasmurf

The 14 day cooling off period has been mentioned a few times. This doesn't apply to maturity reinvestment as the cooling off period relates to using your ISA allowance. However, Coventry do not apply charges on withdrawals and transfers for 21 days after maturity. 

By the way, there is only 1 'o' in lose and losing. 

newatc

I accept that the OP is likely to lose his complaint but it sounds that Coventry are morally wrong which unfortunately counts for little (not even much sympathy from this board).

Curdy

newatc said:

I accept that the OP is likely to lose his complaint but it sounds that Coventry are morally wrong which unfortunately counts for little (not even much sympathy from this board).

Thanks Newatc. I agree not much sympathy shown but never mind. People love telling you where you went wrong. I genuinely misunderstood the fact that I could lose more then the interest accrued. I guess the thing I really object to is the lack of warning that this may happen and the fact that it is a punitive charge. We will see what the ombudsman says, but the answers above have at least helped me to frame the appeal.

Curdy

Eyeful said:

Perhaps there is Curdy said:

Firstly many thanks for everyones who took the time to research and respond. Really appreciated. The new ISA is now set up and money transferred so there is no going back. In terms of my alleged wrongdoing by Coventry, I have always assumed that you could only loose the accrued interest, not part of the principle. I don't think this was made clear to me by Coventry. Other investments make it very clear that the principle sum is at risk and can be lost. Coventrys ISA did not. Also, the penalty charge (close to £400) bears no relation to their costs or losses, so is disproportionate and therefore unfair.

(a) "Stocks & Shares ISA": This is where your investment is at risk. You are paid a dividend.
 On top of this you have to pay fees and charges.
(b) "Savings Cash ISA". The savings are "safe" but are at risk to inflation. You are paid interest.
If you do not meet the terms & conditions of the account, you are charged the equivalent of so many days loss of interest. If the charge is larger than the interest you have accrued, the balance is deducted from the savings. 

Your answer suggests that you did not understand the difference between the two.

I understand the difference but there should be no difference in the warnings you get with the two if you can lose money in both. Stocks and share isas have clear warnings. Savings cash isas do not.

dunstonh

I understand the difference but there should be no difference in the warnings you get with the two if you can lose money in both. Stocks and share isas have clear warnings. Savings cash isas do not.

Maybe a warning in bullet type form that "you can close or transfer the ISA balance before ..... but we charge you the equivalent to 120 days' interest on the account balance.

eskbanker

To be fair, I'm sure some providers of fixed term cash ISAs* do amplify on the explanation of interest penalties by explicitly stating words to the effect that 'this could result in getting back less than you paid in', but that doesn't signify that those who don't choose such wording are deficient or in breach of any regulations....

* such as Yorkshire BS:

Closure is permitted during the term subject to an amount equivalent to 120 days’ loss of interest on the closing balance. Any loss of interest will be offset against any accrued interest not yet paid. If there is insufficient accrued interest outstanding the charge will be deducted from the account balance prior to closure.

masonic

newatc said:

I accept that the OP is likely to lose his complaint but it sounds that Coventry are morally wrong which unfortunately counts for little (not even much sympathy from this board).

While this isn't Moralsavingexpert, I think it is more morally wrong not to hold your hands up when you make a mistake or refuse to to accept the consequences. FOS resources will be used to adjudicate this complaint when they are already facing a large backlog, including serious cases where people have been severely wronged. Coventry may be hit with a £550 charge for this, even if the complaint is not upheld. All of its members will ultimately bear that cost. How is that in any way the morally right outcome?

Whomever is responsible for the ISA transfer request not reaching Coventry within 21 days of the prior account maturing is at fault here. If it wasn't for this delay, no charge would have been levied.

masonic

Curdy said:

Eyeful said:

Perhaps there is Curdy said:

Firstly many thanks for everyones who took the time to research and respond. Really appreciated. The new ISA is now set up and money transferred so there is no going back. In terms of my alleged wrongdoing by Coventry, I have always assumed that you could only loose the accrued interest, not part of the principle. I don't think this was made clear to me by Coventry. Other investments make it very clear that the principle sum is at risk and can be lost. Coventrys ISA did not. Also, the penalty charge (close to £400) bears no relation to their costs or losses, so is disproportionate and therefore unfair.

(a) "Stocks & Shares ISA": This is where your investment is at risk. You are paid a dividend.
 On top of this you have to pay fees and charges.
(b) "Savings Cash ISA". The savings are "safe" but are at risk to inflation. You are paid interest.
If you do not meet the terms & conditions of the account, you are charged the equivalent of so many days loss of interest. If the charge is larger than the interest you have accrued, the balance is deducted from the savings. 

Your answer suggests that you did not understand the difference between the two.

I understand the difference but there should be no difference in the warnings you get with the two if you can lose money in both. Stocks and share isas have clear warnings. Savings cash isas do not.

Do you understand that most bank accounts have fees if account holders take certain actions or make certain requests, and that these are deducted from the balance of the account? Warnings that your investment is at risk as made for S&S ISAs should not be applied to these bank accounts, because fees and charges are not a risk. They are defined within the terms and can be known in advance of taking out a product. The FCA has this right IMHO, and any such warning applied to savings would make the warning meaningless when applied to investments.

One thing they could do, is, rather than say "the equivalent to 120 days' interest on the account balance", they could give an actual value, such as "0.493% of the account balance". The downside to this is that it would need to be varied along with the interest rate, whereas the "the equivalent of 120 days interest" does not need to be changed when the interest rate is varied.

Curdy

masonic said:

newatc said:

I accept that the OP is likely to lose his complaint but it sounds that Coventry are morally wrong which unfortunately counts for little (not even much sympathy from this board).

While this isn't Moralsavingexpert, I think it is more morally wrong not to hold your hands up when you make a mistake or refuse to to accept the consequences. FOS resources will be used to adjudicate this complaint when they are already facing a large backlog, including serious cases where people have been severely wronged. Coventry may be hit with a £550 charge for this, even if the complaint is not upheld. All of its members will ultimately bear that cost. How is that in any way the morally right outcome?

Whomever is responsible for the ISA transfer request not reaching Coventry within 21 days of the prior account maturing is at fault here. If it wasn't for this delay, no charge would have been levied.

I received a letter today from Coventry to say that they have refunded the penalty as it was wrongly applied. One can speculate about the reasons why they did this, but I am now satisfied that they have done the right thing for which I will thank them for. Thanks to all those who assisted. I must say Masonic, if I had listened to you, I would be hundreds of pounds poorer, but I appreciate you have a valid point of view. Thanks for your time.