I made a mistake with ISA, given the wrong advice to correct it. update 2: complaint upheld

silvercar

I would be interested to know what I can expect from the BS to correct their error after my mistake.

I went online to open an ISA with a 20k deposit on 5/4/23 intending to open a fixed rate ISA. By mistake I opened a fixed rate bond at the same rate and for the same length.

Within minutes I realised my mistake and phoned up. They said that it could be fixed as the bond had a cooling off period of 14 days. Their solution was that I open the fixed rate ISA product, don't fund it and send a secure message to cancel the bond and transfer the money to the unfunded ISA I had just opened. I followed the instructions. I had an email the next morning to say I had a message, the message said that they are dealing with my earlier message!

What I expected to happen, given that I had asked advice and followed their instruction, was that they sort it out on 5/4/23 so it is all in the correct tax year. What they could have done, and would imho have been the correct response was to tell me that they couldn't sort it out in time, but they could cancel the bond and return the money. That would have given me hours (which would have been plenty of time) to open the correct ISA and fund it from elsewhere and wait for the bond money to be returned. So I feel the advice given was wrong. Do I have any redress?

Update: Having heard nothing and it being near the 14 day deadline, I called. Only to be told there is no 14 day cooling off period and its just tough. No apology for not letting me know this or for giving me wrong information. 

eskbanker

To what extent did they actually confirm that the messaging, cancelling the bond and funding the ISA could all be accomplished on the same day (which would be one of the busiest of the year)?

ForumUser7

I’ve seen ombudsman decisions go either way. Sometimes they instruct the provider to compensate to the value of tax relief lost, and sometimes they say that the providers acted in a fair and reasonable manner, and it was the customers fault for instructing it so late, given they had the whole tax year to act. It really depends on the circumstances, and if you clearly stated you needed it doing the same day and if they said that would happen, therefore setting an expectation.

masonic

It's too early to judge that the provider hasn't accepted your funds as a subscription for a 2022/23 ISA. However, if they do not, your complaint will turn on the extent to which the provider assured you that you'd end up with a 2022/23 ISA and not a 2023/24 ISA. Whether the advice you were given was wrong depends on precisely what it was, because nothing stated above looks to be incorrect. Did you discuss with them at all that you had another £20k available to fund the ISA? It would not be unreasonable for someone to assume that would not be the case.

silvercar

I said I was opening the ISA before the tax year end, though surely the vast vast majority of people opening an ISA on 5 April of any year would be doing so.

I didn’t discuss further funds, so they wouldn’t know either way on that. They didn’t ask me if I had further funds available, nor did they mention that they may not be responding to messages quickly enough to make the transfer happen in the right tax year.

The reply to the message saying it has been forwarded to the correct department, suggest to me that it hasn’t yet happened. 

As it happens there is now a better fixed rate available for the same term from someone else, so if they haven’t done the transfer yet, then I would prefer them refund me completely. But I don’t want to muddy the waters further and don’t want to not be a customer if I need to complain formally.

Thanks for all your advice. 

eskbanker

silvercar said:

I said I was opening the ISA before the tax year end, though surely the vast vast majority of people opening an ISA on 5 April of any year would be doing so. 

Perhaps, but there have been plenty of people on here talking about opening a fixed rate ISA late in 2022/23 in order to secure a decent rate, even though they wouldn't be intending to fund it until early in 2023/24, so the provider wouldn't be in a position to divine what you had in mind without clear communication.  Maybe harsh, but the vast majority of people wouldn't leave it until the very last day to use their annual ISA allowance, especially among those who apparently have more than enough liquid funds available!

silvercar said:

nor did they mention that they may not be responding to messages quickly enough to make the transfer happen in the right tax year

To be honest, it sounds like you were assuming they'd be able to complete a series of tasks within that same day, rather than them actually saying, or even implying, this, but obviously nobody else on here was party to the conversation.

silvercar said:

As it happens there is now a better fixed rate available for the same term from someone else, so if they haven’t done the transfer yet, then I would prefer them refund me completely. But I don’t want to muddy the waters further and don’t want to not be a customer if I need to complain formally.

It sounds like you're not really minded to pursue the matter, but if you were, you could always ask for a recording of the call (via a subject access request) and ascertain exactly what was and wasn't said?

masonic

silvercar said:

I said I was opening the ISA before the tax year end, though surely the vast vast majority of people opening an ISA on 5 April of any year would be doing so.

For the majority of people opening an ISA, the tax year will be of no consequence because they won't have multiples of the annual allowance to save. People can sometimes get a skewed perception of what is normal practice from reading this forum, as there are a disproportionate number of people posting here who use their full ISA allowance every tax year. In the general population, it is quite rare.

silvercar said:

I didn’t discuss further funds, so they wouldn’t know either way on that. They didn’t ask me if I had further funds available, nor did they mention that they may not be responding to messages quickly enough to make the transfer happen in the right tax year.

The reply to the message saying it has been forwarded to the correct department, suggest to me that it hasn’t yet happened.

Whether or not it has yet happened is immaterial to the question of whether your subscription will be treated as having been made in the 2022/23 tax year when it is applied to the ISA. That will come down to the exact procedures followed. If it was deemed received and accepted on 5th April as a result of your discussion, then all is well, but it is unclear exactly what course of action was being proposed.

The proposed course of action (whatever it may turn out to be) has flowed from the information you provided. Unlike regulated financial advice, where an adviser would be expected to probe you and get to the bottom of your overall financial position before making recommendations, a customer service agent is entitled to make suggestions on the basis of the information you give them. In this case it does seem as though they might not have been provided with sufficient information to determine the best course of action for your particular set of circumstances, and made a reasonable suggestion on the basis of what they did know. However, if you did impress upon them the importance that the proceeds of this cancelled fixed rate bond be applied as a 2022/23 subscription, then there would be a case for them to answer if it turns out that isn't what they do.

born_again

Given how busy ISA departments are at this time of year. Expecting it all done on the same day (no time given of when opened or messages sent) 
So it is more than possible that department shut @ 17:00 & may not get round to the request on the same day, as they would deal with any requests in the order they are received.

Even if they had said they would cancel & return the funds. Odds on it would not have been the same day. As depending on how payment was made it may not have fully debited.

silvercar

Having heard nothing, other than a message that they are dealing with my request, I called up. To be told that I had been given wrong information in the there is no cooling off period with bonds. 

I voiced my upset that I had been given wrong information and that no one had made contact to tell me this. Does anyone know if the financial equivalent of DSR apply to savings products opened online?

dunstonh

Does anyone know if the financial equivalent of DSR apply to savings products opened online?

Financial products are exempt as they have their own equivalent in many areas apart from those where it is not feasible.  

silvercar

dunstonh said:

Does anyone know if the financial equivalent of DSR apply to savings products opened online?

Financial products are exempt as they have their own equivalent in many areas apart from those where it is not feasible.  

So the equivalent seems to be the "distance marketing of financial services". This has a 14 day cooling off period. Is there any reason why this wouldn't apply to savings bonds?