Confused - ISAs - One of the Banks talking nonsense it seems :/

eskbanker

jr941 said:

Thanks. I wonder why the Natwest adviser said that I will use my allowance I am on the phone with Co-Op right now to cancel. 

jr941 said:

The Co-Op adviser said the same thing. Cancelling within the cooling off period also loses the allowance aka the money paid into that account in that early duration

They're wrong then - it's all clearly explained at https://www.gov.uk/guidance/how-to-open-an-isa-as-an-isa-manager#cancellation

jr941 said:

The senior adviser of Co-Op also couldn't find this restriction of Nat not letting people open a fixed deposit ISA with a different bank. 

I just downloaded the two pdfs and I cannot find anything. Was this adviser a loony or something:

Not being allowed to fund multiple cash ISAs in the same tax year isn't a NatWest-specific restriction - it's one of the fundamental ISA rules, hence its prominent inclusion at the start of the high-level ISA documentation at gov.uk linked earlier.

jr941

So they are definitely wrong. Thank you.

The Nat adviser said that you can open a fixed deposit ISA but only at Nat, not any other bank because I have a Help to Buy with them. This information also appears to be wrong. Both Co-Op advisers couldn't verify it.

In fact, they said that the first time ever they are hearing this. The second adviser was some senior person. The first adviser of Co-Op, double checked this. I cannot find anything of this sort on their two relevant PDFs.

How often does a bank talk nonsense to keep the funds with them? This is seriously an absurd experience. Since yesterday I have wasted so much time on this. May the Lord help mercy on the souls of people who struggle with this stuff every year 

eskbanker

jr941 said:

So they are definitely wrong. Thank you.

The Nat adviser said that you can open a fixed deposit ISA but only at Nat, not any other bank because I have a Help to Buy with them. This information also appears to be wrong. Both Co-Op advisers couldn't verify it.

In fact, they said that the first time ever they are hearing this. The second adviser was some senior person. The first adviser of Co-Op, double checked this. I cannot find anything of this sort on their two relevant PDFs.

Perhaps worth reading through the thread again as we went through all this yesterday - if you have a HTB ISA with NatWest that's been funded during this tax year then you are allowed to fund another cash ISA with NatWest (as they support the split ISA model which treats both as one cash ISA), but not with any other institution.  I included links to the relevant wording at NatWest's website earlier on....

jr941

Why is this information not on the terms and conditions of the two PDFs? God, I am so tired of going back and forth..

Co-Op is saying I will lose my entire allowance of the money I had transferred to their fixed deposit even if I cancel it in the cooling off period.

Should I just cancel both accounts and simply give up on this as the allowance cannot be saved?

Thanks. Much apprfeciated.

eskbanker

jr941 said:

Why is this information not on the terms and conditions of the two PDFs?

It is - from the second document:

Subscribing to both a NatWest cash ISA and a NatWest Help to Buy: ISA

You may subscribe to another cash ISA in the same tax year as you subscribe to a Help to Buy: ISA provided that:
• the other cash ISA is held with us; and
• you don’t subscribe more than the annual subscription limit between the Help to Buy: ISA and the other cash ISA. 

jr941 said:

Co-Op is saying I will lose my entire allowance of the money I had transferred to their fixed deposit even if I cancel it in the cooling off period.

They're wrong then, feel free to quote the government guidance to them, or their own terms at https://www.co-operativebank.co.uk/assets/pdf/bank/savings/cashisa/fixed-rate-cash-isa.pdf

What if I open a Fixed Rate Cash ISA, then change my mind?
• You have a right to cancel your ISA, without giving any reason, for 14 calendar days from the date the account is opened or upon receipt of your welcome letter, whichever is later.
• It’s important that you notify us if you change your mind, and don’t simply close your ISA. If you close your account without notifying us that you have changed your mind, you will lose the tax-free* status of any previous tax years’^ subscriptions that have been transferred to us, and if you have paid any of the current tax year’s^ subscription into the ISA, you will be unable to open a cash ISA with us or any other provider in the same tax year^.

jr941 said:

Should I just cancel both accounts and simply give up on this as the allowance cannot be saved?

@masonic summarised your options yesterday - don't make a decision based on erroneous information from a Co-Op adviser though!

jr941

Btw, what happens, if I don't do anything and leave the funds in the Co-Op's fixed deposit as it is? What is the penalty? 

I am really tired of doing this. It seems I am gaining nothing here at all. The Co-Op account is within the 28 days period and the Natwest account is within the 14 days period. 

The Co-Op adviser said that any closure or a standard transfer to another account will end up in losing the allowance.

If I do the formal transfer via the form - CO-OP to Natwest fixed deposit - How long does that usually take? Is this 'ONLY' way out now?

eskbanker

jr941 said:

Btw, what happens, if I don't do anything and leave the funds in the Co-Op's fixed deposit as it is? What is the penalty?

Defined at https://www.co-operativebank.co.uk/products/savings/isas/fixed-rate-cash-isa/

Withdrawals during the fixed term are subject to 180 days’ loss of interest on the amount of money withdrawn

Edit: sorry, that might not be what you mean by 'penalty' - are you referring to what HMRC might do?

jr941 said:

The Co-Op account is within the 28 days period

What 28 day period?  Their cooling-off period seems to be 14 days, are you within that?  If not, that may explain their answers....

jr941

Oh thanks. Just read this. 

I have to give up on the Co-Op account for sure! Thank youuuuuuuuuuuuuu!!!!!!!!!!!!!!!!!!!!!!!!!!! 

I am within the 28 day period, not 14. That's something which is worrying me now. I thought they were both within the 14 day duration previously. Sorry about this confusion.

jr941

''Edit: sorry, that might not be what you mean by 'penalty' - are you referring to what HMRC might do?''

Yes

eskbanker

jr941 said:

''Edit: sorry, that might not be what you mean by 'penalty' - are you referring to what HMRC might do?''

Yes

As mentioned earlier, HMRC will usually forgive a first error arising from a genuine mistake, as opposed to a deliberate attempt to subvert the system, but even if they decided to impose a sanction, I believe (without citable sources) that this would typically take the form of declaring the second ISA subscriptions (i.e. the Co-op ones here) to be invalid and to include the current tax year interest as taxable income.

However, given the withdrawal penalty and the low probability (and scale) of any sanction being applied, leaving the Co-Op account alone is likely to be the most sensible option from here....