Early withdrawal from cash ISA as per Martin - provider not allowing

AlanF

Hi,

I've been following the guidance in "Martin's cash ISA warning" in this week's MSE Money Tips email. The article is at https://www.moneysavingexpert.com/latesttip/?anchor=cashisa&utm_source=MSE_Newsletter&utm_medium=email&utm_term=17-Jan-23-26d154a72f940b2822f-63c70cc073628ca568f0f944914d080e&source=CRM-MSETIP-26d154a72f940b2822f&utm_campaign=nt-highlights&utm_content=5#cashisa

Within this article is the statement - "Yet unlike normal fixes where you're locked in, fixed cash ISA rules mean you must be allowed to withdraw early - usually for an interest penalty" - just wondering if anyone can link me to these rules, as there isn't a link or reference in the article.

My own ISA provider (poor interest rate) has responded to my email asking what their penalty for early withdrawal, by telling me that I am not allowed to withdraw early - which contradicts Martin's statement (and Martin is unlikely to be wrong!). The wording of their reply is:

"We don’t usually accept early withdrawals unless there is an exceptional circumstance. If this is the case, then you will need to submit an early withdrawal request. This is either a letter or an email explaining why you need the funds early. These are then assessed on a case-by-case basis, and we may ask for proof. If it were to be accepted, we would send you any penalty that may apply."

As my request would be to transfer, rather than withdraw the cash, I can hardly claim that I need the funds early. 

Just wondering if anyone can point me to the "fixed cash ISA rules" to which Martin refers in his article?

Thanks

Alan

Bigwheels1111

What is the exact isa, ie Skipton issue 3.
Then someone might be able to find you the T&C for the product.

Albermarle

Who is the ISA provider ? 
How long is the fixed term, and how long is left before it finishes?

masonic

Most likely they haven't appreciated that the account to which you are referring is an ISA.

See https://www.gov.uk/guidance/transfer-an-isa-if-youre-an-isa-manager

"Investors have the right to transfer their ISAs whenever they want and this right must be included in the manager’s ISA terms and conditions."

MDMD

If you asked them to withdraw they might be able to refuse - but you can just submit a transfer request and they would be obliged to honour it (less the penalty).

EssexHebridean

Yes - I think this may be a wording issue. Their reply seems to bear this out too.  You definitely don’t want to withdraw as then you’ll lose the tax free status. 

masonic

MDMD said:

If you asked them to withdraw they might be able to refuse - but you can just submit a transfer request and they would be obliged to honour it (less the penalty).

They are permitted to refuse partial withdrawals (just like they can refuse partial transfers), but "Investors have the right to close their ISAs whenever they want and this right must be included in your ISA terms and conditions."

AndyTh_2

masonic said:

Most likely they haven't appreciated that the account to which you are referring is an ISA.

See https://www.gov.uk/guidance/transfer-an-isa-if-youre-an-isa-manager

"Investors have the right to transfer their ISAs whenever they want and this right must be included in the manager’s ISA terms and conditions."

yep, there is an edge case though with IFISAs which have frozen withdrawals from loans. Some people will have experienced that in 2020

masonic

AndyTh_2 said:

masonic said:

Most likely they haven't appreciated that the account to which you are referring is an ISA.

See https://www.gov.uk/guidance/transfer-an-isa-if-youre-an-isa-manager

"Investors have the right to transfer their ISAs whenever they want and this right must be included in the manager’s ISA terms and conditions."

yep, there is an edge case though with IFISAs which have frozen withdrawals from loans. Some people will have experienced that in 2020

True, although even S&S ISAs can suffer from suspended shares or gated funds.

km1500

You can close your cash Isa at any time that it enshined in law - yes there might be an interest penalty but they cannot stop you closing it and withdrawing everything.

What is not enshined in law are partial withdrawals

AlanF

Hello everybody - original poster here - thanks for all the responses. I think the comment about wording was correct (although in my defence the wording in Martin's article was the same - to refer to withdrawal when actually he was talking about transferring out "Yet unlike normal fixes where you're locked in, fixed cash ISA rules mean you must be allowed to withdraw early - usually for an interest penalty" - so I have now found the T&C for the account, which does specify a 180 day penalty.
Many thanks for all the helpful comments. I won't name the provider as I acknowledge that I probably asked the wrong question!
Thanks again
Alan F