Chorley Building Society - hidden charge?

Mike_from_Croydon

I'm reviewing my savings accounts, and was about to open an ISA with Chorley Building Society, listed as a top pick on MSE. On the listing, the only penalty mentioned for withdrawals is a limit of three per year (otherwise the interest rate reduces).

However, when looking carefully at the documentation on Chorley's website, e.g. the Key Features
https://www.chorleybs.co.uk/wp-content/uploads/2023/05/41AN-Easy-Access-ISA-3-Withdrawals-Account-V3.pdf
the only methods of withdrawing money are cash, cheque, or transfer to a bank or building society via CHAPS.  For CHAPS there is a £25 fee.  This seems to me to be a hidden penalty.

I don't recall being charged a fee for withdrawing money from any other ISA to my bank account (or a new ISA) before.  For example, whilst the charges document for Yorkshire BS says there is a £23.50 fee for CHAPS, it is also possible to transfer money via Faster Payments (which despite the name is slightly slower than CHAPS).
(Link to Charges document via https://www.ybs.co.uk/savings/isas)

If I've understood correctly, this charge would cut into any gains that would be made from transferring funds from a provider with a lower interest rate, and should be made clear on the MSE listing (and on Chorley's own website).

General_Grant

Mike_from_Croydon said:

I'm reviewing my savings accounts, and was about to open an ISA with Chorley Building Society, listed as a top pick on MSE. On the listing, the only penalty mentioned for withdrawals is a limit of three per year (otherwise the interest rate reduces).

However, when looking carefully at the documentation on Chorley's website, e.g. the Key Features
https://www.chorleybs.co.uk/wp-content/uploads/2023/05/41AN-Easy-Access-ISA-3-Withdrawals-Account-V3.pdf
the (A) only methods of withdrawing money are cash, cheque, or transfer to a bank or building society via CHAPS.  For CHAPS there is a £25 fee.  This seems to me to be a hidden penalty.

I don't recall being charged a fee for withdrawing money from any other ISA to my bank account ((B) or a new ISA) before.  For example, whilst the charges document for Yorkshire BS says there is a £23.50 fee for CHAPS, it is also possible to transfer money via Faster Payments (which despite the name is slightly slower than CHAPS).
(Link to Charges document via https://www.ybs.co.uk/savings/isas)

If I've understood correctly,(C) this charge would cut into any gains that would be made from transferring funds from a provider with a lower interest rate, and should be made clear on the MSE listing (and on Chorley's own website).

(A)  You omitted the other method for withdrawing - "and transfers out to other ISA providers can be made".

(B)  Doesn't appear that Chorley would either.

(C)  why would the withdrawal terms affect transferring funds in from another provider who is offering less when you could transfer out again?

refluxer

Yes - if those T&Cs are correct, then you're right. Accounts like this are often intended for local residents but I would still find withdrawals by cash or cheque only to be a pain, even if I was local !

If you only intend to transfer in and out to another ISA at some stage then I guess that wouldn't matter but for anyone wanting to treat it a bit more like an easy access bank account (and make occasional cash withdrawals) the rate on offer is not high enough to justify the inconvenience, when compared to the likes of Paragon and Cynergy who's rates are only slightly less but who don't restrict you to paying for an online withdrawal.

I would go with Paragon's Triple Access ISA @ 3.51% all day long. (I've actually got that account myself)

dunstonh

the only methods of withdrawing money are cash, cheque, or transfer to a bank or building society via CHAPS.  For CHAPS there is a £25 fee.  This seems to me to be a hidden penalty.

How is it hidden when it is displayed in the KFD?

I don't recall being charged a fee for withdrawing money from any other ISA to my bank account (or a new ISA) before.

Have you ever done CHAPS before with those withdrawals?   It is commonplace for the CHAPS method to carry an extra charge.   If you used BACs, faster payment or cheque, then you would usually avoid any charge. 

 For example, whilst the charges document for Yorkshire BS says there is a £23.50 fee for CHAPS, it is also possible to transfer money via Faster Payments (which despite the name is slightly slower than CHAPS).

CHAPs carries increased guarantees than faster payments.      However, you highlight very similar terms to Chorley.

If I've understood correctly, this charge would cut into any gains that would be made from transferring funds from a provider with a lower interest rate, and should be made clear on the MSE listing (and on Chorley's own website).

I dont think you have understood it correctly.    The use of CHAPS is an active decision by you.  Most people will use BACs/faster payments.

eskbanker

dunstonh said:
I dont think you have understood it correctly.    The use of CHAPS is an active decision by you.  Most people will use BACs/faster payments.

I don't think you have understood correctly!  OP's point is that they don't seem to support BACS/faster payments, and that the only options they offer are cash, cheque, CHAPS or ISA transfer to another provider.

ForumUser7

I thought Chorley do allow FPs - https://www.chorleybs.co.uk/chorley-online/ https://www.chorleybs.co.uk/chorley-online/helpful-information/

"You may withdraw by cash, cheque or CHAPs* (*subject to a £25 fee) and transfers out to other ISA providers can be made.

You are permitted to make 3 withdrawals per year without incurring a penalty.  (the account year runs from 1st

January to 31st December). Additional withdrawals will result in a lower rate of interest equivalent to the Chorley Cash ISA account rate (currently 1.60% Gross p.a./AER)  being paid for the rest of the account year. At the start of the new account year the account will revert back to the Easy Access Cash ISA (3 Withdrawals) interest rate available at that time. Cheques requested by post or online for withdrawals or closures will be issued within 48 hours of receipt and posted 1st class to the account holder. You can also request an online payment from this account, to a nominated bank account or to any of your Chorley accounts, providing these are in your own or joint names.

Withdrawal conditions apply; please refer to section 9 of the Savings Account General Terms and Conditions and section 7 of the Chorley Online Terms and Conditions for further details.

Our Easy Access Cash ISA (3 Withdrawals) is not a ‘Flexible ISA’. This means that all your deposits within the tax year count towards your ISA allowance, regardless of whether or not you make any withdrawals." ~ https://www.chorleybs.co.uk/saving/41an/

“Nominated Account” for some types of account we require you to setup a “Nominated Account”. This means the personal UK bank or building society account which you have given us details of when you opened your account with us (or any replacement account which you have told us you would like to use for this purpose which meets our requirements and which we have updated on our records as your Nominated Account). This is the account which we require to be used to send/receive payments into/out of your account. Nominated Accounts must be held with UK banks or building societies, must be capable of receiving Faster Payments, CHAPS and BACS and you must be named as the account holder. The Product Specific Features will explain if a Nominated Account is required." ~ https://www.chorleybs.co.uk/wp-content/uploads/2021/11/Chorley-BS-Savings-TCs-Dec21.pdf

Mike_from_Croydon

Only refluxer and eskbanker seem to have understood my point.  According to Chorley's documentation, the only way of withdrawing money without the inconvenience of cash or cheque incurs a £25 fee.  (They don't say explicitly whether this would or would not apply when transferring to another ISA, but that would certainly be done electronically.)

To illustrate, suppose someone has a £1000 deposit and makes a withdrawal.  They incur a £25 fee, which reduces the effective interest rate by 2.5% (25/1000, expressed as a percentage).  That's without taking into account any reduction in the balalnce.

I'm going to put this to Chorley and see what they say.  

mebu60

Mike_from_Croydon said:

Only refluxer and eskbanker seem to have understood my point.  According to Chorley's documentation, the only way of withdrawing money without the inconvenience of cash or cheque incurs a £25 fee.  (They don't say explicitly whether this would or would not apply when transferring to another ISA, but that would certainly be done electronically.)

To illustrate, suppose someone has a £1000 deposit and makes a withdrawal.  They incur a £25 fee, which reduces the effective interest rate by 2.5% (25/1000, expressed as a percentage).  That's without taking into account any reduction in the balalnce.

I'm going to put this to Chorley and see what they say.  

I expect they will say exactly what ForumUser7 has highlighted above. Await to hear. 

Mike_from_Croydon

What they said was "We have recently added a new process, after an account has been opened  you can register for our Chorley Online Service we do offer transfers to a nominated Bank Account free of charge."