Coventry ISA Transfer Penalty

fuzzzzy

I agree. I also feel very uneasy about automatic transfers into fixed rate products.

All sorts of things can happen in life and the last thing you want if you happen to end up in hospital or something is worrying about your maturing products.

Equally annoying are the institutions who roll your product over to easy access with a pitiful interest rate. As you say the only ethical option for an institution would be to roll your product over into their best paying easy access.

boingy

Yeah, I've always thought it's a bit off for the default action to be to put it in a new fixed term account. I assume you get a cancellation period but a more helpful default action would be to convert it into a new instant access account. Some of these accounts only give you a window of a week or less to issue instructions for what to do at maturity. It's easy to miss that window. Maybe your phone or email aren't working or you are on holiday with less access to stuff.

For example, I have an Atom Fixed Rate maturing on Friday. They have sent me several emails about it but the window for issuing instructions is just three days! I don't know why it has to be such a short window. Their default it to move it to an Instant Savings if you have one or to a low-paying "holding account" if you don't. Not ideal but better than tying you into a new fixed term. But quite why I can't give them maturity instructions several weeks in advance is a mystery!

subjecttocontract

Surely there is no mystery ?
They are in business to make a profit and any process that puts them at an advantage will be seized upon. They are simply doing what they know they can get away with that will improve their bottom line.

boingy

subjecttocontract said:

Surely there is no mystery ?
They are in business to make a profit and any process that puts them at an advantage will be seized upon. They are simply doing what they know they can get away with that will improve their bottom line.

I find you very literal sometimes. 

surreysaver

fuzzzzy said:

I agree. I also feel very uneasy about automatic transfers into fixed rate products.

All sorts of things can happen in life and the last thing you want if you happen to end up in hospital or something is worrying about your maturing products.

Equally annoying are the institutions who roll your product over to easy access with a pitiful interest rate. As you say the only ethical option for an institution would be to roll your product over into their best paying easy access.

But an easy access account wouldn't have any penalties for withdrawing the money.

I suppose ideally, you'd give maturity instructions at the same time as opening the account, with an option to change those instructions approaching the maturity date

PTurner_2

I may not be the cleverest person around, but even I recognise that just because the small print says something, it doesn't make it right, even if it's legal. I think any reasonable person in a similar situation would feel automatically rolling an ISA over into a 3 year fixed product with a 180-day penalty for withdrawal is taking the mickey. 

eskbanker

PTurner_2 said:

I may not be the cleverest person around, but even I recognise that just because the small print says something, it doesn't make it right, even if it's legal.

You're obviously entitled to your opinion about what constitutes 'right', but if the Ts & Cs are legal then they define what will happen, even if you'd prefer it didn't.

PTurner_2 said:

I think any reasonable person in a similar situation would feel automatically rolling an ISA over into a 3 year fixed product with a 180-day penalty for withdrawal is taking the mickey. 

I think any reasonable person, even those choosing not to read Ts & Cs when opening a financial product, would at least read the summary box that informs those people of the salient points, and would certainly read the letter sent prior to maturity, that reiterates what'll happen by default, if they want the right to complain about its contents after the event.

PTurner_2

eskbanker said:

PTurner_2 said:

I may not be the cleverest person around, but even I recognise that just because the small print says something, it doesn't make it right, even if it's legal.

You're obviously entitled to your opinion about what constitutes 'right', but if the Ts & Cs are legal then they define what will happen, even if you'd prefer it didn't.

PTurner_2 said:

I think any reasonable person in a similar situation would feel automatically rolling an ISA over into a 3 year fixed product with a 180-day penalty for withdrawal is taking the mickey. 

I think any reasonable person, even those choosing not to read Ts & Cs when opening a financial product, would at least read the summary box that informs those people of the salient points, and would certainly read the letter sent prior to maturity, that reiterates what'll happen by default, if they want the right to complain about its contents after the event.

Yes, that's reasonable, I agree.

If it had been me making the investment, I would hope I'd have read the terms thoroughly and responded in a timely manner when the original ISA matured.

But as I said earlier, it was my mother's investment, which I've been trying to help her with now her dementia has advanced and she's no longer able to keep on top of her affairs.

I did eventually find the letter they sent out at maturity as well, which made it clear what would happen. So far, so good.

I still think automatically rolling it over into another 3-year fixed ISA with a 180-day interest penalty for early withdrawal is needlessly punitive.