Big banks 'ignoring' the new isa 2024 rules , does it matter?

poseidon1

https://www-thisismoney-co-uk.cdn.ampproject.org/v/s/www.thisismoney.co.uk/money/saving/article-13316161/amp/Big-banks-ignoring-new-rules-let-savers-open-one-Isa-year.html?amp_gsa=1&amp_js_v=a9&usqp=mq331AQGsAEggAID#amp_tf=From %1$s&aoh=17133493708496&csi=0&referrer=https://www.google.com&ampshare=https://www.thisismoney.co.uk/money/saving/article-13316161/Big-banks-ignoring-new-rules-let-savers-open-one-Isa-year.html

There is a rather spirited thread on the go with a number of posters expressing varying degrees of concern and ire at the failure/ (refusal?) of many savings institutions to implement the government's changes to allow multiple isa applications and transfers in any given isa year.

However, looking at the big picture and outside the echo chamber of forums like this, does this failure ( if indeed this can be charactised as such) really matter?

I would hope that most forum readers and contributors would agree that the relentless pursuit of best savings rates achievable is relatively speaking, a tiny minority sport.

Most of us if honest, would have to concede that within our own circle of friends and family we are far more driven to make the most of our financial resources, than those around us and far more likely to take notice and ultimately implement initiatives that assist us in that journey.

So if it remains the case, that the overwhelming majority of the saving public  lack the impetus to avail themselves of the opportunities that already exsist to improve their lot, why  from a cost/ benefit point of view should the big banks devote resources to beef up their back end operations to accommodate a dubious government initiative likely to only be of interest to a very small cohort of the saving public.

In this respect, I would also level a similar criticism on the proposed Brit ISA on  exactly the same grounds.

As an aside, government money would be better applied in improving the general financial literacy levels of the general populace rather than on new schemes only of interest to the very small contingent who have educated/motivated themselves in this regard.

born_again

Not always easy to update systems.
Given this was only announced autumn statement 23. Banks have been trying to update systems to allow savers to have more than 1 isa within the brand. Not quite as easy as it should be, as requires a lot of testing to ensure there are no issues.
Don't want another TSB meltdown do we....

LHW99

Very often a provider with a good offer on a fixed rate may not be the best for flexible access (and vice versa), so possibly the slowness may not have too much effect.

friolento

It’s nothing new that banks and building societies don’t have to offer everything they are allowed to offer. Even under the old ISA rules, not all providers accepted transfers-in, or partial transfers, despite those being perfectly legal.

There’s a very large selection of ISAs available, and now everyone is free to spread their £20k allowance across as many providers as they like. The expectation that each of the providers would now offer multiple (how many?) of the same ISA type in the same tax year was just a wrong, and unfounded, expectation.

The only criticism I have is if a provider’s T&Cs still state that you must not subscribe to more than one ISA of the same type in the same year. I just ignore this term as they have no means of knowing whether I do unless I tell them - and even then, there’s nothing they can do about it. Others might want to report such providers - possibly to the HMRC.

Bottom line: I am very pleased with the new rules, and I have no complaints about any providers regarding the new rules.

friolento

born_again said:

Not always easy to update systems.
Given this was only announced autumn statement 23. Banks have been trying to update systems to allow savers to have more than 1 isa within the brand. Not quite as easy as it should be, as requires a lot of testing to ensure there are no issues.
Don't want another TSB meltdown do we....

They don’t all offer multiple concurrent versions of the same other savings accounts (easy access, Notice, Fixed Term, Regular Savers) - so it’s a mystery to me why people expect they would/should offer multiple concurrent ISAs.

Section62

friolento said:

born_again said:

Not always easy to update systems.
Given this was only announced autumn statement 23. Banks have been trying to update systems to allow savers to have more than 1 isa within the brand. Not quite as easy as it should be, as requires a lot of testing to ensure there are no issues.
Don't want another TSB meltdown do we....

They don’t all offer multiple concurrent versions of the same other savings accounts (easy access, Notice, Fixed Term, Regular Savers) - so it’s a mystery to me why people expect they would/should offer multiple concurrent ISAs.

Do any of the banks say if you have a (say) fixed-term account you can't open their (say) regular saver?

The ISA part is just a wrapper, not really an account type in itself.  It would seem odd for a bank to allow a customer to open both a fixed-term account and a regular saver (both non-ISA), but then restrict choice to one ISA version of each account type.

(not disputing that banks and building societies don't have to offer any particular savings account.)

Section62

born_again said:

Not always easy to update systems.
Given this was only announced autumn statement 23. Banks have been trying to update systems to allow savers to have more than 1 isa within the brand. Not quite as easy as it should be, as requires a lot of testing to ensure there are no issues.
Don't want another TSB meltdown do we....

I wonder about this.  Presuming banks implement the restriction in their account application routine(s) then it doesn't seem an overly onerous task to amend the routine to stop/override the part of the eligibility checks that looks to see whether the applicant already has an (/current year) ISA?

We've seen how quickly some of the banks have been able to react to close off an application loophole (e.g. multiple accounts, wrong geographic area etc) so I'm not that convinced they need much more than 4 months to tweak the application process, although some of the other stuff - like reporting the amount of annual allowance* remaining - might need a bit more work and testing.

(*which in most cases is fairly useless as the bank in question doesn't know how much of your annual allowance you've used elsewhere.)

jimjames

born_again said:

Not always easy to update systems.
Given this was only announced autumn ...

No need to update systems, banks are free to choose if they want to allow multiple ISAs at their bank, there is no requirement to do so. Banks cannot dictate which accounts a customer can open at other institutions when it is permitted by HMRC. No difference in opening a S&S ISA and cash ISA at different places

FindingBBob

Couple of things to note on this - while announced back in teh Autumn HMRC only issued final guidance 3 weeks before tax year end - and while not all changes require sysytem updates, just changing terms and conditions to accomodate these changes takes weeks.. also as most cash isa are transacted electronically between providers when customers want to move money there are system updates required to do this otherwise it is a manual process..which is very long. There are providers that already allow you to split your ISAs between their products.. I would suggest it will be the 2nd half of the year before most providers are ready and or willing to offer. 

eskbanker

born_again said:

Not always easy to update systems.
Given this was only announced autumn statement 23. Banks have been trying to update systems to allow savers to have more than 1 isa within the brand. Not quite as easy as it should be, as requires a lot of testing to ensure there are no issues.
Don't want another TSB meltdown do we....

My understanding is that even though the reforms were indeed announced in November, the legislation wasn't written into law until last month, and, unsurprisingly, the key HMRC guidance documentation, incorporating interpretation of the legislation, followed thereafter, so the notion that the institutions were dragging their heels doesn't withstand much scrutiny.

Having said that, there are no obvious reasons why they'd continue to publish boilerplate wording about not subscribing to other ISAs of the same type elsewhere, as this shouldn't entail any validation checking or software changes....

friolento

FindingBBob said:

Couple of things to note on this - while announced back in teh Autumn HMRC only issued final guidance 3 weeks before tax year end - and while not all changes require sysytem updates, just changing terms and conditions to accomodate these changes takes weeks.. also as most cash isa are transacted electronically between providers when customers want to move money there are system updates required to do this otherwise it is a manual process..which is very long. There are providers that already allow you to split your ISAs between their products.. I would suggest it will be the 2nd half of the year before most providers are ready and or willing to offer. 

I can't see why there would be a pressing need to change the transfer processing. Although it is now permitted to make partial transfers of current year deposits, providers can simply say they don't allow/support partial transfers. They have always been free not to offer partial transfers so there's nothing much new from their point of view. It would be nice, though, if all of them allowed partial transfers out.