Cash ISA Transfer - Loss of interest during transfer

BigBlueSky

I've recently transferred a Cash ISA from Cynergy Bank to Trading212.

As part of the Cash ISA regulations there should be no loss of interest to the customer when this occurs. The old provider should pay interest up to the point the new provider starts paying interest.

The transfer completed on the old account on Friday and this is the day showing the withdrawal. With Trading 212 it shows the deposit date as Monday (ie, 3 days loss of interest).

Has anyone experienced this before and know how to get it corrected? I've asked Trading 212 and they just say they start paying from the date they apply the funds to the account.

Thanks in advance 

gravel_2

Same happened to me, but not over a weekend. So as far as I can see I lost one day of interest where the monies were in limbo.

Hoenir

BigBlueSky said:

As part of the Cash ISA regulations there should be no loss of interest to the customer when this occurs. The old provider should pay interest up to the point the new provider starts paying interest.

There's no liability though for non working days. Neither provider should cover this at their expense. 

Albermarle

How much is actually involved? £5? 

BigBlueSky

Albermarle said:

How much is actually involved? £5? 

No, it is about £39.

masonic

BigBlueSky said:

I've recently transferred a Cash ISA from Cynergy Bank to Trading212.

As part of the Cash ISA regulations there should be no loss of interest to the customer when this occurs. The old provider should pay interest up to the point the new provider starts paying interest.

<snip>

Which ISA regulation states this? Are you perhaps referring to the industry best practice guidelines that are "recommendations only and not prescriptive"?

nottsphil

Albermarle said:

How much is actually involved? £5? 

Totally irrelevant.
There's an important principle here in that that one institution or the other (whether by circumstance or collusion) has the use of your money for free on certain days in direct contravention of the commitment to calculate interest daily.

masonic

nottsphil said:
There's an important principle here in that that one institution or the other (whether by circumstance or collusion) has the use of your money for free on certain days in direct contravention of the commitment to calculate interest daily.

Since neither ISA manager is a clearing bank, it is unlikely either of them had use of the money while it was in flight between them. I also don't believe there is any commitment by either organisation to pay interest to a customer when their money is temporarily held in an account that is not in their name, such as a central holding account, though I'm happy to be corrected on that latter point if you can point it out in either set of T&Cs. The commitment to calculate interest daily is limited to the balance of specific accounts opened by the customer.

k12479

nottsphil said:

Albermarle said:

How much is actually involved? £5? 

Totally irrelevant.
There's an important principle here in that that one institution or the other (whether by circumstance or collusion) has the use of your money for free on certain days in direct contravention of the commitment to calculate interest daily.

An even more important principle is to not make unfounded insinuations.

refluxer

BigBlueSky said:

As part of the Cash ISA regulations there should be no loss of interest to the customer when this occurs. The old provider should pay interest up to the point the new provider starts paying interest.

While it amounts to the same thing, the liability for loss of interest actually lies with the receiving provider who, according to the 'best practice' guidelines, should back-date the interest to the date the funds left the sending account, to ensure that no interest is lost.

• Interest on the transferred funds should be backdated either to the date on the cheque, inclusive, or to the date which represents ‘day 16’ of the transfer process, inclusive – whichever is earlier.

• For electronic payments, interest on the transferred funds should be backdated either to the date the payment was initiated, inclusive, or to the date which represents ‘day 16’ of the transfer process, inclusive – whichever is earlier. 

This has definitely been the case for many ISA transfers I've done in the past that have been via cheque, where the receiving provider has back-dated the deposit date to the date the money left the originating account (so the date the cheque was issued, rather than the actual date the receiving provider processed it).

This actually makes sense if you think about it because, in a worst-case scenario where ISA funds are sent via cheque and the receiving provider takes many weeks to process it, it's fair enough that the sending provider shouldn't be required to cover any loss of interest caused by the new provider's inefficiencies, plus it's the new provider who's gaining from the transfer, too.

Anyway - it's a small point, but I thought it was just worth clarifying and you're right to pursue Trading 212 about this issue, rather than Cynergy. 

BigBlueSky said:

The transfer completed on the old account on Friday and this is the day showing the withdrawal. With Trading 212 it shows the deposit date as Monday (ie, 3 days loss of interest).

Has anyone experienced this before and know how to get it corrected? I've asked Trading 212 and they just say they start paying from the date they apply the funds to the account.

It would appear in your case that, unfortunately, Trading 212 aren't following the guidelines and the fact they seem to operate on a 'next working day' basis has lead to 3 days loss of interest over a weekend, rather than the 1 you'd presumably get if the transfer was carried out earlier during the working week.

1spiral

refluxer said:

This actually makes sense if you think about it because, in a worst-case scenario where ISA funds are sent via cheque and the receiving provider takes many weeks to process it, it's fair enough that the sending provider shouldn't be required to cover any loss of interest caused by the new provider's inefficiencies, plus it's the new provider who's gaining from the transfer, too.

I had exactly this scenario with Metrobank. There was 14 days between the funds being removed from the original provider before being credited to Metro due to Metro operating a cheque transfer. They wouldn't credit me with the lost interest which took about 6 weeks to break even on from the spread of old and new rates.