ZOPA ISA Transfer Out Penalty Clause

MSM78

Hi All,

I opened a fixed term ISA with ZOPA in June last year (depositing £20k) which unlocked and changed into an 'Easy Access' ISA in June this year.

Prior to the first above unlocking, I opened another one year fixed term ISA with ZOPA (for this tax year) depositing a further 20k, which is of course now locked until April next year.

On attempting to transfer out the now unlocked 'Easy Access' ISA to another provider, ZOPA blocked this stating to do so I'd need to break my fixed term ISA?

It would appear that despite ZOPA treating these as separate ISA "Pots" in their app, they have a bit of an ambiguously (IMO) worded clause which states that the whole lot (regardless of how many pots "Pots" is basically one ISA.

I find their working around this a little misleading, and don't feel it made it too clear the fact that locking any one "Pot" basically locks in all of them down.

Having complained about this, and being told I'm basically stuck with having to break the ISA and pay the 90 day interest penalty, I'm considering whether to appeal it to the Financial Ombudsman.

I accept this is a rather first world problem to have, but pretty annoyed I can't move my now "unlocked" ISA to someone offering a better rate.

Welcome any views.  Perhaps I should have paid more attention to the T&C's, but if nothing else hopefully serves as a word of warning to others considering moving to ZOPA.

qbadger

Take a look in the ISA sub-board and you'll find comments from others concerning this very issue: https://forums.moneysavingexpert.com/discussion/comment/80700236/#Comment_80700236
https://forums.moneysavingexpert.com/discussion/comment/80734309/#Comment_80734309
https://forums.moneysavingexpert.com/discussion/comment/80742386/#Comment_80742386
https://forums.moneysavingexpert.com/discussion/comment/80712227/#Comment_80712227
https://forums.moneysavingexpert.com/discussion/comment/80711016/#Comment_80711016

slinger2

Yes. This has been commented on many times. I've a fixed rate ISA with them but won't open another one with them for exactly this reason. I assume it's all legal but pretty sneaky IMO.

wiseonesomeofthetime

Wow, I must admit, not considering a fixed ISA at this time, I didn't look up that aspect of the T&C, so thanks for the heads-up

Thinking about it, I would definitely have considered my pots as part of the main ISA, but not so sure I would have considered FIXED pots still part of it, so could have stumbled as well.

slinger2

As to the specific circumstances here I suppose the two options are (1) leave the old one in the variable rate pot until next June - currently that's paying a good rate, but whether it will be in the future we don't know, or (2) transfer all out, taking the 90 day penalty on the new pot. That's about 1.2% of that pot. Unless this pot is much smaller than the other it's unlikely to be a tempting option I'd have thought.

refluxer

As you can see from some of the links posted above, I've tried to warn people about this aspect of the way Zopa run their Smart ISA because it's unusual and I thought it might catch people out.

It's not a problem if you only have an access pot or a single fixed term ISA pot, but becomes a potential issue once you start opening different combinations of those. This is the reason why I've only opened one fixed term pot and won't be opening any other pots.

Unfortunately, I'm not sure whether you'd have any success appealing to the Financial Ombudsman because it is mentioned in the Key Facts document, although I personally do think that this 'catch' could be a bit more explicitly described and might be missed if skim-reading the T&Cs (the highlights in bold, which help, are mine)...

What is the Smart ISA?

• The Smart ISA is a deposit savings account that allows you to spread your annual ISA allowance across different cash ISA pots, including our Access pots and various Fixed Term pots.

• You will only have one Smart ISA with us, and opening more than one ISA pot is not equivalent to opening another cash ISA.

Transferring your Smart ISA to another ISA provider

• You can transfer your Smart ISA out at any time. You must transfer out your ISA balance in full.

• If any money you want to transfer out is held in a Fixed Term ISA pot, you will have to pay an interest charge based on the length of the fixed term, which we will deduct before we transfer the funds to your new ISA provider.

Sg28

refluxer said:

As you can see from some of the links posted above, I've tried to warn people about this aspect of the way Zopa run their Smart ISA because it's unusual and I thought it might catch people out.

It's not a problem if you only have an access pot or a single fixed term ISA pot, but becomes a potential issue once you start opening different combinations of those. This is the reason why I've only opened one fixed term pot and won't be opening any other pots.

Unfortunately, I'm not sure whether you'd have any success appealing to the Financial Ombudsman because it is mentioned in the Key Facts document, although I personally do think that this 'catch' could be a bit more explicitly described and might be missed if skim-reading the T&Cs (the highlights in bold, which help, are mine)...

What is the Smart ISA?

• The Smart ISA is a deposit savings account that allows you to spread your annual ISA allowance across different cash ISA pots, including our Access pots and various Fixed Term pots.

• You will only have one Smart ISA with us, and opening more than one ISA pot is not equivalent to opening another cash ISA.

Transferring your Smart ISA to another ISA provider

• You can transfer your Smart ISA out at any time. You must transfer out your ISA balance in full.

• If any money you want to transfer out is held in a Fixed Term ISA pot, you will have to pay an interest charge based on the length of the fixed term, which we will deduct before we transfer the funds to your new ISA provider.

Thanks for this. I could have easily been caught out by opening a fixed pot over the coming months as money is maturing elsewhere. 

Barkin

refluxer said:

As you can see from some of the links posted above, I've tried to warn people about this aspect of the way Zopa run their Smart ISA because it's unusual and I thought it might catch people out.

It's not a problem if you only have an access pot or a single fixed term ISA pot, but becomes a potential issue once you start opening different combinations of those. This is the reason why I've only opened one fixed term pot and won't be opening any other pots.

Unfortunately, I'm not sure whether you'd have any success appealing to the Financial Ombudsman because it is mentioned in the Key Facts document, although I personally do think that this 'catch' could be a bit more explicitly described and might be missed if skim-reading the T&Cs (the highlights in bold, which help, are mine)...

What is the Smart ISA?

• The Smart ISA is a deposit savings account that allows you to spread your annual ISA allowance across different cash ISA pots, including our Access pots and various Fixed Term pots.

• You will only have one Smart ISA with us, and opening more than one ISA pot is not equivalent to opening another cash ISA.

Transferring your Smart ISA to another ISA provider

• You can transfer your Smart ISA out at any time. You must transfer out your ISA balance in full.

• If any money you want to transfer out is held in a Fixed Term ISA pot, you will have to pay an interest charge based on the length of the fixed term, which we will deduct before we transfer the funds to your new ISA provider.

Seems explicit and clear enough to me, but I'm one of those weirdo's that reads this stuff before I press the button  

slinger2

Clear enough indeed. Just different to everyone else. I've never look at the ISA regulations but I'm wondering whether they envisaged a Cash ISA like this, where some of the cash was fixed rate and subject to a penalty for transfer and other parts of the cash weren't. Normally it's one or the other.