Coventry ISA Transfer Penalty

PTurner_2

Hi all, perhaps someone with a bit more insight can help me out with this.

I have (well, had) a Coventry ISA that matured last year. So, having procrastinated for several months, I just recently got around to transferring it to another provider with a higher % rate, but I was hit with their 120 day interest penalty.

I was under the impression that the penalties do not apply once the ISA had matured? But reading their (not particularly thorough) terms leaves me with the impression that you will *always* (after the original 14 day cooling off period) be charged a 120 day penalty if you decide to leave Coventry for another provider.

Is this correct?

refluxer

The penalty will only apply if you withdraw or transfer from a fixed rate ISA before maturity. What type of ISA did the Coventry ISA mature into ? Are you sure it wasn't another fixed rate ?

If you didn't submit any maturity instructions, then most fixed rate cash ISAs will automatically convert into 'maturity' or easy access ISAs (from which there should be no penalty for withdrawals or transferring away), but there are some providers who will automatically transfer a maturing fixed rate ISA into another one of the same duration if they don't hear from you.

PTurner_2

Thanks for the reply. I'm admittedly not the sharpest tool in the box, so it's quite possible Coventry transferred it into another fixed ISA without instructions from me, and I was none the wiser.

refluxer

PTurner_2 said:

Thanks for the reply. I'm admittedly not the sharpest tool in the box, so it's quite possible Coventry transferred it into another fixed ISA without instructions from me, and I was none the wiser.

If your T&Cs were the same as the current ones then, unfortunately, it looks like Coventry BS are indeed one of those providers...

"We’ll write to you at least 14 days before this to let you know how you can re-invest your savings with us, take out some or all of your money or arrange an ISA transfer out of the account. There will be a default option – another ISA with us. The length of the fixed ISA will either be shorter, the same or no more than six months longer than the duration of your current fixed ISA, and options to take money out will be no more restrictive than those offered by your original account.

At maturity, the money in this account will be automatically re-invested into the default option unless you have asked us to do something else with it. However, you’ll have the option to take money out or even close your new ISA, without being charged within 21 days after the end of your fixed period."

Albermarle

PTurner_2 said:

Thanks for the reply. I'm admittedly not the sharpest tool in the box, so it's quite possible Coventry transferred it into another fixed ISA without instructions from me, and I was none the wiser.

They will have contacted you at least 14 days before the previous fixed rate ended, to give you your options.
In fact most providers in reality  contact you more around 30 days before, and usually send one or two reminders as well.
So I presume you just ignored the messages. You would not be the first.

badger09

PTurner_2 said:

Thanks for the reply. I'm admittedly not the sharpest tool in the box, so it's quite possible Coventry transferred it into another fixed ISA without instructions from me, and I was none the wiser.

I’ve just had a look at the T&Cs for Coventry’s currently available FRISA
This says they will write to you at least 14 days before maturity with your options. The default though is to roll it into another FRISA of the same, or shorter length. 

That seems to be what’s happened with yours & by xfering it, you triggered the penalty. Did you not check your ISA before arranging the xfer? 

Suggest you make a diary note as to what will happen to your new ISA after any FR term expires. 

PTurner_2

badger09 said:
Suggest you make a diary note as to what will happen to your new ISA after any FR term expires. 

Yes, this is what I should have done. It's not actually my ISA, I offered to transfer it on behalf of my very elderly mother with dementia, who gets even more confused than I do, and who swore she'd received no documentation.

Searching high and low, I did eventually find a form. Turns out it would have been transferred into a 3 year fixed ISA by default, which wouldn't have matured until the end of 2025. So despite the (huge) penalty, the higher % she's now earning should eventually pay off.

Definitely won't be going anywhere near Coventry again though. It was my mistake, but a 6-month penalty and an automatic roll-over to a 3-year Fixed ISA seems unnecessarily punitive and intended to trip people up.

mebu60

120 days is significantly closer to 4 months than 6! 

Providers can't win. In the reverse option someone else would be complaining that despite not dealing with it in a timely fashion they'd been dropped into a low rate easy access rather than rolled over into a new fixed rate as they were 'obviously' in the market for that sort of product. 

PTurner_2

mebu60 said:

120 days is significantly closer to 4 months than 6! 

Providers can't win. In the reverse option someone else would be complaining that despite not dealing with it in a timely fashion they'd been dropped into a low rate easy access rather than rolled over into a new fixed rate as they were 'obviously' in the market for that sort of product. 

I assumed 120 days on a rough paper calculation, but it turns out it was actually 180 days.

badger09

PTurner_2 said:

badger09 said:
Suggest you make a diary note as to what will happen to your new ISA after any FR term expires. 

Yes, this is what I should have done. It's not actually my ISA, I offered to transfer it on behalf of my very elderly mother with dementia, who gets even more confused than I do, and who swore she'd received no documentation.

Searching high and low, I did eventually find a form. Turns out it would have been transferred into a 3 year fixed ISA by default, which wouldn't have matured until the end of 2025. So despite the (huge) penalty, the higher % she's now earning should eventually pay off.

Definitely won't be going anywhere near Coventry again though. It was my mistake, but a 6-month penalty and an automatic roll-over to a 3-year Fixed ISA seems unnecessarily punitive and intended to trip people up.

BIB That’s actually 2 years. So if the maturing ISA was either a 3 year or 2 year FRISA, Coventry did nothing wrong by rolling into this one. 

xylophone

Coventry did nothing wrong by rolling into this one. 

Well..... they acted within their terms and conditions but I have to say that I feel uneasy about the ethics of an automatic transfer into  anything other than an easy access account (with interest at their highest available rate for easy access).


Very many years ago, I had a five year fixed rate account  ( with the Halifax, I think) which matured and a similar process was followed.

I can't quite remember now under what circumstances I failed to give instructions on maturity but I do recall that after I realised what had

 happened,  i made a branch visit and was permitted to unwind the new fixed rate automatic transfer without penalty and choose another

 product.