New ISA rules April 2024

refluxer

Thankfully, I'm not looking to split this year's allowance across multiple cash ISAs but if I was, then, as far as I'm concerned, Shawbrook have no place to insist that you can't open a cash ISA elsewhere with your 2024-25 allowance in addition to having one with them, particularly as it doesn't break the new ISA rules.

I'm curious to know how they would find out if you did and also the rationale behind it - I suspect it's more likely that the advisors people have spoken to have been ill-informed or are not yet up to speed with the rule changes.

Even if they're within their rights to insist on this strange requirement (perhaps in an effort to ensure you save more in an ISA with them ?), then I can only see this back-firing and ultimately harming their cash ISA uptake, as many will want the enhanced flexibility that comes with the new rules and will look elsewhere instead.

Barkin

jimjames said:

Especially as that has clearly been amended to the current tax year

Yet the product summary pages clearly  state only one ISA with them...

I reckon they're still using the old documents, after doing a quick find/replace to change the dates. 

PeskyBlunder

I just received a written reply from Aldermore in response to a query concerning the contents of their website (you can have more than 1 ISA) vs. their ISA declaration (you can only have 1 ISA overall) - they say:

"We are currently updating the wording in the Terms and Conditions to reflect the recent changes in ISA allowances, please follow what is said on the website, you can indeed have more than one ISA provider."

So that's one clarified!

(Incidentally I was very impressed with a transfer from Charter I requested on Sunday - it was completed today.)

masonic

refluxer said:

Thankfully, I'm not looking to split this year's allowance across multiple cash ISAs but if I was, then, as far as I'm concerned, Shawbrook have no place to insist that you can't open a cash ISA elsewhere with your 2024-25 allowance in addition to having one with them, particularly as it doesn't break the new ISA rules.

I'm curious to know how they would find out if you did and also the rationale behind it - I suspect it's more likely that the advisors people have spoken to have been ill-informed or are not yet up to speed with the rule changes.

Even if they're within their rights to insist on this strange requirement (perhaps in an effort to ensure you save more in an ISA with them ?), then I can only see this back-firing and ultimately harming their cash ISA uptake, as many will want the enhanced flexibility that comes with the new rules and will look elsewhere instead.

The term is unenforceable, due to the Consumer Rights Act and the fact no contractual term can remove a statutory right.

They also cannot find out. If you told them, then they could take no action due to HMRC rules on that.

Reed_Richards

You have a statutory right to open another ISA elsewhere but do Shawbrook have a right to close your ISA account (by insisting that you move it elsewhere) if they managed to find out that you had breached their terms and conditions?    

TheWoodler

The waters are rather muddied this year by the fact this is a non-mandatory change. That’s where the problem lies. What we’re seeing:

1. Some providers are relying on or pointing to outdated Ts&Cs. I’ve seen a range from November 2020 to March 2024 . . .

2. Inconsistency elsewhere - the main summary blurb, product terms, general terms, and ISA declaration not updated as a suite, so different parts at odds with each other.

3. Outdated or inconsistent materials seem to be inadvertent in several cases - sloppy copy, basically.

4. Elsewhere it probably reflects policy or stance. For example, providers can still say you can only open one Cash ISA with them, and that’s fine, especially if they acknowledge that you are free to open others in this FY elsewhere up to the £20k limit. Not a problem, so long as they make it clear you are free to take some of the current year’s ISA business elsewhere. That’s in line with both the consumer’s and the provider’s statutory rights (they don’t *have* to offer multiple concurrent Cash ISAs to customers).

5. However, I’ve seen this worded ambiguously in the main blurb (see inconsistency above!) such that they seem to indicate you can only open one Cash ISA, even though the ISA declaration itself may be compliant. It feels to me in these instances that they’re not wanting to draw attention to competition, basically - this is unfair for the consumer. 

6. Finally, insisting that the customer can only open one per year full stop is a conflict with the consumer’s statutory right. The issue is that this not only introduces uncertainty for the consumer, it also places the provider at odds with the market and opens up various cans of worms! The consumer always has that right - it is not withheld from any qualifying individual over 18.

Is the issue then the non-mandatory nature of the change for the provider, and is it therefore an unintended consequence of the badging of that change to the regs, or is it poor understanding amongst compliance teams, or poor training? Or a mixture?

Shawbrook say clearly on their website that their ISA isn’t for you if you want to ‘save with someone else’ - it’s very prominent - but if you look at their general terms they say they are governed by the ISA regulations and any change will be applied as soon as they take effect. 

Principality note in the product terms where there is a conflict between their terms and the ISA regulations that the ISA regulations apply, unless the regulation is optional, when the account terms will apply. 

IMHO this would have been better as a mandatory change with the only optional element for providers whether they offer portfolio provision (more than one Cash ISA per FY opened and funded by the same customer).  

I think this will shake the market a bit as customer decision-making will be based on clarity and the possibility of this playing out as providers get squeezed between customer complaints and regulatory compliance. 

I haven’t been overly impressed with what I’ve seen so far in several instances!

Rich2808

Reed_Richards said:

You have a statutory right to open another ISA elsewhere but do Shawbrook have a right to close your ISA account (by insisting that you move it elsewhere) if they managed to find out that you had breached their terms and conditions?    

They would have no idea you opened another ISA with another provider - unless you tell them. 

They are of course perfectly entitled to decide to let people open and pay new 2024-25 funds into only one cash ISA product with themselves - they cannot prevent you opening other cash ISAs with other providers with new 2024-25 funds using the balance of your £20k allowance as that is perfectly legal since 6 April.

What they don't know - won't hurt them!

eskbanker

On the subject of knowing what's being subscribed elsewhere, HMRC choose interesting wording, presumably to signify "don't ask us":

1.2 Allow subscriptions to multiple ISAs of the same type, except for Lifetime ISA and Junior ISA

This change is not mandatory, and managers can choose to limit subscriptions to only one ISA held with them in any tax year. 

[...]

You are still responsible for making sure the overall ISA limit is not exceeded for subscriptions made with you. It’s not possible for you to know if investors are subscribing, or have subscribed, with other ISA managers, nor the amount of any such subscriptions. Individual investors remain responsible for managing their overall subscription limits. 

https://www.gov.uk/government/publications/tax-free-savings-newsletter-11/tax-free-savings-newsletter-11#individual-savings-account-isa-reform-2024

masonic

Reed_Richards said:

You have a statutory right to open another ISA elsewhere but do Shawbrook have a right to close your ISA account (by insisting that you move it elsewhere) if they managed to find out that you had breached their terms and conditions?    

Let us assume it was fair for providers to take such a stance. Why wouldn't banks say of any account "you can only hold this account if your only account of this type is with us". In the case of a current account or credit card, they could find out about others you hold and enforce it. The answer is that it would be considered an unfair, anti-competitive practice. The Financial Ombudsman Service (and FCA) would have a field day protecting customers from such treatment. I'd suggest anyone who's received a communication to this effect about a cash ISA makes a formal complaint.

Carl13

Have just called Paragon regarding another matter and thought I would mention the new rules as I see they offer the option to spread your yearly allowance over more than one Cash ISA. However, the operator told me they do "not allow" you to spread your allowance over multiple banks. Therefore you are a captured customer with them for the tax year if you only use part of your allowance now. How these rules are being applied are actually reducing freedom of options for customers and will probably result in various banks losing / not gaining customers or having money pulled from accounts as well as increasing the number of rule "breaks" depending on the wording on declarations and how each establishment is applying the rules (who will enforce these; the banks, HMRC who struggle to operate a phone line now and from personal experience can not confirm the most basic tax advice correctly?).