UPDATE: ISA Transfer - they lost my money! 😖 (Do you lose interest when switching?)

Idpullthecurtain

I have recently transferred my Cash ISA for a higher rate.  But this process is taking a long time.  And its still not complete.
Do you I lose the interest on that ISA for the interim period?  I hadnt factored that and it would be a significant amount of interest....
TIA

eskbanker

Interest should be dovetailed so that the ceding provider pays it up to the day before funds transfer or cheque issue, and the receiving provider pays from that transmission date - this was documented in the official gov.uk ISA pages but no longer seems to be there, although can be seen in archives such as:

https://web.archive.org/web/20230202094231/https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/693198/Appendices.pdf

Idpullthecurtain

Thanks for that.  Its nonsense that this process can take weeks.  The money is in "limbo" for weeks and potentially you lose £100s.

eskbanker

Idpullthecurtain said:

Thanks for that.  Its nonsense that this process can take weeks.  The money is in "limbo" for weeks and potentially you lose £100s.

It should take no more than three weeks:

Deadlines and complaints

ISA transfers should take no longer than:

• 15 working days for transfers between cash ISAs

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

Best thing will generally be to concentrate on chasing the receiving provider (which institutions are involved here?) to get it completed, and after that, if you can demonstrate financial loss from the defined transfer window being exceeded, which can reasonably be pinned on them, you can raise a formal complaint.

[Deleted User]

Hi,

according to MSE Isa guide,

The banks have agreed to a guideline of 15 working days for the transfer to take place, so you should begin to receive interest within this time. If it goes much over 15 working days, it's worth complaining to the ISA provider to see if it can speed it up, or at least compensate you if the delay means you lose a decent chunk of interest.

subjecttocontract

My experience is that some banks apply the 15 days from when they receive the transferred sum.......Metro as an example seem to operate this way.  If you apply for an immediate transfer the old ISA provider can take around 10 days to send the transfer sum. In my case with a Tesco ISA, Tesco took 10 working days to post a cheque. So, the 15 days can be virtually impossible to achieve.

If you transfer £85K and loose 5% interest for 15 days that's around £175 in lost interest.

The transfer system is rubbish, the rules aren't always being complied with, nobody seems to be policing the system. It doesn't work for many and needs to be sorted.

eskbanker

There's a danger of conflating transfer delays with loss of interest here - it's plausible for one to happen without the other, i.e. a transfer taking significantly less than 15 days can still entail loss of interest, and one taking more than 15 days might not lose any.

However, the breakdown of the 15 days is clearly defined in the rules:

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. The 15 days are 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 2 days are to allow for time taken for first class post between managers.

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

subjecttocontract

I agree the rules do seem to be clearly defined. So, why are they being regularly broken/exceeded and the isa providers not being policed ?

What's far more important is why is it every time I or my wife transfer an isa it takes a very long, frustrating time ?

The system needs improving........it isn't fit for purpose !

eskbanker

What actions have you taken each time your transfers have exceeded 15 working days, i.e. complaining to providers, FOS, FCA (if genuinely systemic), etc?

Idpullthecurtain

Im just hoping for the best.  The process is ridiculous.  I will be losing up to 3 weeks interest (or more) which is hundreds.  All to get a higher rate.  I guess I didn't think this through, I thought it would take a few days.

eskbanker

Idpullthecurtain said:

Im just hoping for the best.  The process is ridiculous.  I will be losing up to 3 weeks interest (or more) which is hundreds.  All to get a higher rate.  I guess I didn't think this through, I thought it would take a few days.

Why will you be losing all that interest (bearing in mind the first reply on this thread)?