Delay in transferring to new ISA provider

Silw

Good afternoon,
I am hoping someone can help explain the delay in transferring from 1 ISA provider to another. Definitely benefits the provider not the saver!
I and daughter both hold cash ISAs.
The ISAs were held in 1 year fixed rate bonds maturing on 18/01/2023.
I started to look round for the best rates available currently( using MSE site😀) and found a better rate than our current provider was offering.
We opened new fixed rate bonds during the first week in January with another provider ( on line) but ticked the appropriate box to say not to have the funds transferred  until after 18/01/ 2023 when the bonds matured. I presumed wrongly! that the transfers would take place on either the 19th or 20th as I again presumed this is just an electronic transfer which could easily be set up in advance and the old provider was obviously notified by the new provider on or around the 7th January that I and daughter were moving provider..
I and my daughter indeed received letters from the new provider dated 7th January to say the accounts had been opened and were waiting for funds….correct.
Today I and my daughter receive letters from the old provider who held the bonds that matured on 18th. It states that the money held in the bonds has been transferred to 30 day deposit accounts awaiting instructions on what we want to do with the funds. It does state that if we have already arranged a transfer then that is in progress or words to that effect and if the transfers takes place before the 30 days we will not be penalised.
However, I do not see why there should be any delay as we set up the new accounts and instructions within plenty of time. I telephoned my new provider who informs me there could be a delay of anything up to 15 working days? What!
Evidently this is within the t&cs of cash ISAs. This is extremely beneficial to banks.
Effectively my old provider has my and my daughters money on a poor interest account earning less than if it was in the new bond I have set up. Why the delay? 
Ok the amount of interest I am loosing is not huge but I and my daughter have a not inconsiderable mount of money saved within the ISA wrapper, well over 6 figures. It is currently earning 2.80% in the 30 day notice account. It would be earning nearly 4% if it was where it should be as of today to my mind.
If this situation is mirrored by millions of pounds then the amounts banks are making out of delaying transfer is not insignificant. Bit like the banker who stole a penny out of everybody’s accounts each month. Do that often enough and it amounts to a fair sum. Many a mickle macks a muckle as the Scots say!
I would be very grateful if anyone could confirm  that banks are allowed to delay transfer requests of cash ISAs up to 15 working days and if so maybe advise me who I should contact to challenge this as to my mind this appears a nice little earner for the banks,  holding savers funds in poor interest bearing accounts.
Thank you in advance.
Thought this relevant to Martin Lewis as he has been advising people to check and transfer ISAs if they are not currently getting the best rates available.

eskbanker

Silw said:

I would be very grateful if anyone could confirm  that banks are allowed to delay transfer requests of cash ISAs up to 15 working days and if so maybe advise me who I should contact to challenge this

https://www.gov.uk/individual-savings-accounts/transferring-your-isa confirms:

ISA transfers should take no longer than:

• 15 working days for transfers between cash ISAs
• 30 calendar days for other types of transfer

so if you want to get the rules changed then lobby your MP....

Edit: this isn't the money-earner for banks that you seem to believe it is, as the money should always be earning interest from either the old or the new provider, who shouldn't leave a gap, i.e. the money will be in one or the other, not floating somewhere in between.

Albermarle

I think you are maybe being a bit unrealistic about the efficiency of some of these providers, and the transfer process. Many are large companies with millions of accounts.
Also due to the rapid increase in interest rates there has been a big upsurge in customers wanting to transfer. At the same time that nearly all of these companies are struggling with staff shortages ( as are many parts of the UK economy).
So some cash ISA transfers go through in a matter of days, and some do not.
It was not so many years ago you could measure the transfer process in weeks ( or even months) rather than days.

Silw

Thanks for your responses. I used to work in banking quite a few years ago. Obviously I am completely out of touch in believing that the standards are even vaguely similar to my day. Despite the advent of the internet and how speedy transactions can be achieved, it appears we are now expected to accept an inferior service and not even dare to complain. I will contact my less than useless MP which no doubt will be a complete waste of time, do you sense there is a similar pattern here!? I originally tried to take out a new fixed ISA with Barclays, my god that was eye opener. Suffice to say I gave up due to their app being less than useless. All I achieved was loosing about 4 hours of my life and an extra £2.10 debit on my telephone bill, having gone over an hour waiting to actually speak with a human being. With the experience I had of Barclays I would not even trust them to look after a box of matches far less our hard earned savings.

TiVo_Lad

It does also depend on whether both the financial organisations participate in the electronic ISA transfer system or not. I did a transfer last autumn where both were participants and the money was in the new account the day after I submitted the transfer request online as part of the account opening process. Can't say fairer than that. However, if one or other doesn't participate, then it's paper forms and lots of hassle. Sometimes the money moves electronically, but other times it's an actual cheque. I'm currently transferring an ISA from Penrith Building Society to a Virgin Fix and that's paper forms and cheques. Luck of the draw, and of course once the cheque is issued, the source organisation is earning interest on your money until the cheque clears. Guarantee they put a second class stamp on the envelope!

xylophone

but ticked the appropriate box to say not to have the funds transferred  until after 18/01/ 2023 

It is only 20th today.

Effectively my old provider has my and my daughters money on a poor interest account 

2.80% is not that poor?

https://www.thisismoney.co.uk/money/saving/article-1583864/Best-savings-rates-Isas-Cash-Isa-accounts-fixed-rate-Isas.html

With the experience I had of Barclays I would not even trust them to look after a box of matches far less our hard earned savings.

I requested a partial transfer from Coventry BS to Barclays on 9 January and it went through on 11 January.

That said, I did not use the app.

xylophone

It does also depend on whether both the financial organisations participate in the electronic ISA transfer system or not.

This is true - I have had experience of both and where the transferor uses the non electronic method, it takes several days for the transfer to complete.

Silw

Yes xylophone it seems the app with Barclays is the issue. After over an hour waiting to speak to a human I asked if I could make an appointment at a branch to organise the ISA. This was on or about the 4th January. Yes an appointment could be made but not until the 26th January and even then the branch was a good 3/4 hour drive away from where I live. Anyway I gave up on Barclays.
Perhaps I was not clear in my original post. It was not that I and my daughter, so far! have been treated in such a tardy way with the transfers, it is that I am surprised that banks have up to 15 working days to do the transfers which is my issue. I presumed wrongly that all ISA transfers were done electronically but obviously I am mistaken and in those instances can see at least some good reason for delays in transfers being actioned.

eskbanker

Silw said:

Perhaps I was not clear in my original post. It was not that I and my daughter, so far! have been treated in such a tardy way with the transfers, it is that I am surprised that banks have up to 15 working days to do the transfers which is my issue. I presumed wrongly that all ISA transfers were done electronically but obviously I am mistaken and in those instances can see at least some good reason for delays in transfers being actioned.

https://www.gov.uk/guidance/transfer-an-isa-if-youre-an-isa-manager#cash-isa-transfers explains the basis of that window, which was defined when postal cheque transfers were the norm but does allow processing time at each end too:

Cash ISA to cash ISA transfers must take place within 15 business days of the transfer instruction being received by the new ISA manager, unless the investor stipulates that the 15 days starts on a later date. This 15 days is broken down as follows:

The new ISA manager has 5 business days to forward the instruction to the old ISA manager.

The old ISA manager has 5 business days in which to send the funds and information to be provided to the new ISA manager.

The new ISA manager has 3 business days to apply the funds to the new ISA.

The other two days are to allow for time taken for first class post between managers.

km1500

If the amount is six figures ie over 100k then the transfer is sent by cheque (that was what I was told when transferring as ISA recently)

No idea of course if this applies to all institutions.

Silw

Well others may think it satisfactory but the transfer which I requested has still not effectively taken place altho I applied to open the new fixed rate bond on or around the 7th January. It is only today 03/02/2023 that I have received notification that my money has been sent via cheque! to the new provider. With a weekend involved I will be lucky to get the money into the bond by the end of next week. It would have been more financially beneficial to stay with the old provider…….maybe this slow service is to discourage moving providers. Not impressed but perhaps being an OAP it is just a case of accepting how standards are these days.