ISA transfer rules

ILikeToSave

I have an fixed rate ISA maturing today (16/06/23). Knowing that ISA transfers take around 15 working days I applied to another savings bank for their ISA which was top of the interest rates, telling them the maturity date. They sent a tranfer request to the existing provider which was rejected, the reason given was, they said, that the ISA regulations stated that a request for a transfer to be carried out at maturity, could only be made 5 days before the maturity date. I can find nothing on the internet to confirm this. The new provider didn't seem to have heard of this regulation and said they would submit the transfer request again. Although I have chased them, they are not replying to say whether they have done so which is very disappointing. The ISA has matured, is still with the old provider, earning 0.1% interest. 
Does anyone know if this 5 day regulation does exist? Searches even on the Government's website are unsuccesful.

ILikeToSave

Sorry, the date of maturity is today, 16/09/23. My bad typing.

masonic

No, there is no such ISA rule that requires transfer instructions specifying a future transfer date to be restricted to a maximum of 5 days in the future. Raise a formal complaint with your existing provider about the wrongful rejection of your valid ISA transfer instruction, and you'd be better off submitting a new transfer request referencing the maturity account.

https://www.gov.uk/guidance/transfer-an-isa-if-youre-an-isa-manager#cash-isa-transfers

Here's what happens if the "investor stipulates that the 15 days starts on a later date":

<snip>

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/693198/Appendices.pdf

So it would seem the old provider failed to pend your case, but instead wrongly rejected it.

ILikeToSave

I've contacted both first and new provider. The old provider is now processing the transfer but, in the meantime, moved the matured amount (accrued to Saturday 16/09/23) into an account paying only 0.1%. The previous rate was just less than 3%. Are they allowed to do this?

masonic

ILikeToSave said:

I've contacted both first and new provider. The old provider is now processing the transfer but, in the meantime, moved the matured amount (accrued to Saturday 16/09/23) into an account paying only 0.1%. The previous rate was just less than 3%. Are they allowed to do this?

What do the T&Cs of your fixed ISA say? In general, yes they are allowed to mature a fixed term ISA into a different account if that was what was in the agreement you signed up to. Most providers would give the customer some choice as to what that account is, but it isn't a requirement to do so.

ILikeToSave

After scanning 48 pages of T&C, the only relevant items seem to be these:-

1.42. If we do not receive your instructions before your account matures, your account will automatically convert

to a Maturity Easy Access Account. This account has a different set of terms and conditions and a different

interest rate, which is typically lower than the Fixed Rate e-Account.

1.43. For any outward payment, your money will be issued on the payment due date and should appear in your

account by the end of the following working day

So, they were informed three weeks prior to maturity of my intention to transfer out, so that would seem to negate item 1.42. The maturity date was Saturday 16/9/23  which is presumably the payment day. The next working day Monday 19th. The funds have reached the new provider only a few minutes ago (19/9/23), not the following working day as stated.

The question then is, should the funds have been transferred into a new very low interest account as item 1.42 does not seem to apply, or should the funds be allowed to continue at the existing rate of interest until they were in a position to despatch the money?

ILikeToSave

PS: I am remiss in that I shouuld be thanking you, masonic, for you help which is very gratefully received.

masonic

ILikeToSave said:

The question then is, should the funds have been transferred into a new very low interest account as item 1.42 does not seem to apply, or should the funds be allowed to continue at the existing rate of interest until they were in a position to despatch the money?

They are under no obligation to pay the fixed rate of interest beyond the term of the account. Given your maturity instructions were initially rejected by your old provider, then they seem to have done a pretty good job of completing the transfer in a timely manner. Where an account matures on a non-working day, then this would normally result in an outward payment being made no earlier than the next working day (Monday), which would give them until the end of today to reach the new ISA manager (who in turn would have until Friday to apply them to your new ISA). It doesn't therefore seem that the initial rejection has made any difference to the outcome, and the transfer was completed within 2 working days of maturity, considerably more quickly than HMRC best practice (5+3 working days).

Albermarle

At the end of the day how much money have you 'lost'? £10 ?