New ISA rules April 2024

TheWoodler

masonic said:

No, what happens when a contract term attempts to override your statutory rights is that the term is automatically considered unfair under the Consumer Rights Act and is rendered null and void. ISA managers should really take swift action to remove anything from their financial promotions that suggest you are not allowed to subscribe to another cash ISA elsewhere as these statements now breach FCA regulations.

Yes, agreed - that’s what I wondered, thank you for confirming. I don’t know why providers haven’t done so already, as their legal and governance people should really have been all over this. 

masonic

TheWoodler said:

masonic said:

No, what happens when a contract term attempts to override your statutory rights is that the term is automatically considered unfair under the Consumer Rights Act and is rendered null and void. ISA managers should really take swift action to remove anything from their financial promotions that suggest you are not allowed to subscribe to another cash ISA elsewhere as these statements now breach FCA regulations.

Yes, agreed - that’s what I wondered, thank you for confirming. I don’t know why providers haven’t done so already, as their legal and governance people should really have been all over this. 

HMRC only updated its guidance for ISA managers yesterday, so they haven't even had one business day to make changes to reflect this.

TheWoodler

Agreed, though I’d say the sector knew this was coming from last year’s announcement to the fact the legislation was made 11 March and laid before Parliament 12 March.

As I said in another similar thread, I work in another sector where we absolutely know when changes to legislation are coming, and we work so that we’re ready the day they come into force. It takes a massive cross-team effort to do so, but we start planning across legal, governance, the teams responsible for putting the relevant legislation into practice, and finally marketing and digital to raise awareness among our audience and make sure our web content is accurate and up-to-date. Every cog in the wheel has its own part to play!

And we don’t have anywhere the budget that the financial institutions do. Maybe it’s my cultural expectation from the sector I work in, but the current approach does appear rather haphazard to me! 

masonic

TheWoodler said:

Agreed, though I’d say the sector knew this was coming from last year’s announcement to the fact the legislation was made 11 March and laid before Parliament 12 March.

As I said in another similar thread, I work in another sector where we absolutely know when changes to legislation are coming, and we work so that we’re ready the day they come into force. It takes a massive cross-team effort to do so, but we start planning across legal, governance, the teams responsible for putting the relevant legislation into practice, and finally marketing and digital to raise awareness among our audience and make sure our web content is accurate and up-to-date. Every cog in the wheel has its own part to play!

And we don’t have anywhere the budget that the financial institutions do. Maybe it’s my cultural expectation from the sector I work in, but the current approach does appear rather haphazard to me! 

If it was laid before Parliament on 12th March, then that would be for 1st reading. When did is complete all stages in both Houses and was therefore ready to receive royal assent? Probably some time later. That's the point at which it could be assured that no further amendments would be made to it.

In any case, the "sector" has no choice but to follow HMRC's lead. They don't merely need to comply with the legislation, they need to comply with HMRC's interpretation of how it should be practically implemented. Which was released yesterday. So I imagine many of these organisations will have busy compliance departments this coming week. It might seem like a no brainer that the ISA declaration wording needed to be changed, but it must remain compliant with HMRC's new guidelines, which therefore must be known before it is changed.

kfm

It was a Statutory Instrument and not primary legislation so doesn't need Royal Assent. The commencement date is provided in the SI (6th April 2024).

TheWoodler

Absolutely - SIs are secondary legislation, so 11 March was the date the legislation was ‘made’, ie signed into law. It entered the public domain on legislation.gov.uk that day at least (there are current SIs on the website that have not yet come into force - already law, but the law comes into operation on a certain specified date).

The Tax Free Savings Newsletter with its guidance was published by HMRC to its stakeholders and entered the public domain on that same day of 11 March: https://www.gov.uk/government/publications/tax-free-savings-newsletter-11/tax-free-savings-newsletter-11

See also newsletter 10, November 2023. That covers ISA digitalisation, which makes me wonder if that’s the stumbling block with implementation, to coordinate the multiple Cash ISA subscriptions, which may explain the almost universal approach of providers so far. 

Nevertheless, user expectations have been raised by this new legislation and press & industry discussion in advance and it absolutely should have been foreseen that people would want to know the lie of the land in this new tax year. 

Individual institutional positions could still have been clearly set out at least in a holding pattern: ‘We are not yet implementing this/do not wish to participate’ so customers at least had some clarity on the subject, especially if there are practical reasons behind it. If it can’t be practically implemented at the moment, although theoretically possible, then customers likewise deserve to know.

I think this has been a very useful discussion to have.

Kim_13

By having the only mandatory change being to restrict cash ISAs to 18+, they’ve undermined a set of changes designed to simplify ISAs. It’s logical that if you are allowed more than one of each type of ISA, more than one ISA with the same provider would also be permitted. Now it’s a maybe.

Only one LISA is a head bit of a head scratcher, especially as it might be useful to have a Cash LISA and a S&S LISA. It’s probably simpler for the administration of the bonus that you’re only allowed one per tax year, but I can’t see that one Cash and one S&S LISA would add much complexity. Some investors would stick to one regardless.

While annoying, I’m still glad they’ve lifted the main restriction. Application’s going in for a Regular Saver ISA, which I sadly had to transfer out last year as the NatWest fix was too good to miss. Now I can have the regular and a fixed.

Edit: Found the answer

masonic

TheWoodler said:

The Tax Free Savings Newsletter with its guidance was published by HMRC to its stakeholders and entered the public domain on that same day of 11 March: https://www.gov.uk/government/publications/tax-free-savings-newsletter-11/tax-free-savings-newsletter-11

See also newsletter 10, November 2023. That covers ISA digitalisation, which makes me wonder if that’s the stumbling block with implementation, to coordinate the multiple Cash ISA subscriptions, which may explain the almost universal approach of providers so far.

Yes, that does seem to contain substantially the same information that has made its way into the guidance pages.

On the point of being "almost universal". There are several examples where the ISA declaration has already been updated, see:

https://www.nationwide.co.uk/savings/help/terms/isa-declaration/

https://www.thetipton.co.uk/media/pemd5g4t/blank-fixed-isa-application-form-6-april-2024.pdf

https://www.postoffice.co.uk/dam6/jcr:404179af-c6ea-4bd7-bb13-2470864960cb/easy-access-cash-isa-web-app.pdf

https://www.ybs.co.uk/documents/100493/1143400/Application-ISA.pdf

In fact, I was unable to find a non-compliant ISA declaration in my perusal of providers who make them available without applying.

...and most providers seem to have amended the wording on their websites from "you can pay into one cash ISA per tax year" to "you can pay into one [PROVIDER] cash ISA per tax year", which is compliant with the new rules. I did see one example stating you can spread your allowance across "different types" of ISA, which is a little misleading.

Obviously the support for multiple ISAs held by the same ISA manager is another kettle of fish, and portfolio ISAs have been around a long time without being supported by most providers. A current year ISA could previously be uniquely identified by just a NINO and ISA manager. This will no longer be the case. So systems may need quite an overhaul to make multiple ISAs possible. It took many months to introduce things like confirmation of payee. This is how it is in highly regulated industries where the IT is highly constrained.

SP_57

There is definitely confusion.  I've just tried to open a Shawbrook ISA whose declaration says you can only open one cash ISA per year (i.e. unchanged).  

I phoned and queried this and was told the changes were only proposed and didn't apply.  Needless to say I can't agree the declaration so can't open the account!

nig3d

about time. I am sure in 2023 I made the mistake at least once (for a minor amount, just 100 pound). AT least now I will stop worrying.