ISA transfers and loss of several days interest

Veteransaver

Hi all,
Are there any rules around cash ISA transfers and length of time from it leaving the old account and arriving in the new account?
Wife and I transferred 2 cash ISAs from Shawbrook to CHIP (they were both requested at the same time- on Sunday 7th September)
My wife's one left Shawbrook account on 12th September (so earned interest until 12th September). Arrived at Chip on 18th September - so effectively 6 days lost interest
My one did slight better, leaving Shawbrook on the 13th September, and arriving on 16th September.
Does that seem right / fair?
Appreciate it is a weekend so may expect it possible to lose 3 days over a weekend (although Shawbrook seem to have chosen to do them over a weekend, rather than on a Monday (the requests were actually made on a Sunday), so if not transferring on the Monday 8th, could have done them on the 16th to still be with the 15 day target.
It's not a lot of money, but it seems a bit fast and loose to me, there's no reason the payments can't go same day via faster payments.

MSE_ForumTeam5

We've moved this to the ISA board

eskbanker

Veteransaver said:

My wife's one left Shawbrook account on 12th September (so earned interest until 12th September). Arrived at Chip on 18th September - so effectively 6 days lost interest

Recommended practice for cash ISA transfers is for the receiving provider to pay interest from the day after the funds left the ceding provider, to avoid any loss of interest, so check with Chip exactly what their policy is, as it's not necessarily only paid from the date the money was credited.

Veteransaver said:
there's no reason the payments can't go same day via faster payments.

ISA transfers aren't processed on the same basis as Faster Payments, as there's more admin involved than simply getting the money physically moved from one provider to another.

Veteransaver

eskbanker said:

Veteransaver said:

My wife's one left Shawbrook account on 12th September (so earned interest until 12th September). Arrived at Chip on 18th September - so effectively 6 days lost interest

Recommended practice for cash ISA transfers is for the receiving provider to pay interest from the day after the funds left the ceding provider, to avoid any loss of interest, so check with Chip exactly what their policy is, as it's not necessarily only paid from the date the money was credited.

Veteransaver said:
there's no reason the payments can't go same day via faster payments.

ISA transfers aren't processed on the same basis as Faster Payments, as there's more admin involved than simply getting the money physically moved from one provider to another.

Thanks -I'll check with Chip - but Chip shows the current cumulative pending interest position, which is inline with the funds being credited on the 16th September on one account and 18th September on the other. Obviously that could change or the effective date could change I suppose. I'll wait until the interest is credited next month to see exactly how it's been worked out.
Either way there is an argument to be had as to why one was effectively 3 days later than the other.

sheslookinhot

What is the “argument to be had” ?

Both transfers were well within the 15 day target.

Veteransaver

sheslookinhot said:

What is the “argument to be had” ?

Both transfers were well within the 15 day target.

Yes the transfers were done within 15 days, that doesn't mean you should lose up to 15 days of interest. 

TheBanker

Veteransaver said:

sheslookinhot said:

What is the “argument to be had” ?

Both transfers were well within the 15 day target.

Yes the transfers were done within 15 days, that doesn't mean you should lose up to 15 days of interest. 

The 15 days is specified in the HMRC ISA regulations as an acceptable period for a transfer, so you could lose upto 15 days interest unless the new ISA terms and conditions specify a shorter period.

You could complain, but I think you would be relying on the provider deciding to make a goodwill payment as they have processed the transfer according to the rules. 

Veteransaver

TheBanker said:

Veteransaver said:

sheslookinhot said:

What is the “argument to be had” ?

Both transfers were well within the 15 day target.

Yes the transfers were done within 15 days, that doesn't mean you should lose up to 15 days of interest. 

The 15 days is specified in the HMRC ISA regulations as an acceptable period for a transfer, so you could lose upto 15 days interest unless the new ISA terms and conditions specify a shorter period.

You could complain, but I think you would be relying on the provider deciding to make a goodwill payment as they have processed the transfer according to the rules. 

The 15 day period is relating to the actual transfer. As far as I can work out a common date of transfer should be agreed between the 2 providers (and this is how any transfers I've done in the past have worked, so max 1 day loss of interest)
So I don't think it's acceptable for the original provider to only pay interest up to say the 12th September and for the new provider to only pay from the 18th September.
I have a feeling this is a Shawbrook issue who are playing a little bit loose, when I've done internal ISA transfers with them eg from a maturing fixed rate into another Shawbrook ISA I also seem to lose a days interest, which should not happen imo (and doesn't happen with other providers)
Someone has had the benefit of that money in the interim, where has it gone?
I agree though that if say the original account was paying 1% and the new one 5% I wouldn't have a claim on the difference between the interest rates unless the transfer had taking over 15 days, but that is not what i am arguing here

masonic

Veteransaver said:

Someone has had the benefit of that money in the interim, where has it gone?

It seems unlikely that a transfer from Shawbrook to Chip would have taken place via cheque, but if it had, it may well be the case that Shawbrook's holding account from which the cheque is drawn is non-interest-bearing for Shawbrook.

In the case of an electronic transfer, this would have been by Faster Payment and on a timescale Shawbrook could control, so it would have the benefit of the money up to the date of the transfer (likely to be the 12th and 13th September respectively in your case). After that, it would have been received into Chip's holding account, which we know is provided by ClearBank, which pays the BoE base rate.

Many providers signed up to the following best practice guidelines, introduced in 2017, which would have meant that interest was backdated: https://www.tisa.uk.com/publications/762_BBA01-470823-v1-Revised_Cash_ISA_Transfers_Industry_Guidelines_-_1_Janu....pdf

I don't know what Chip's policy on this would be, as they'd be responsible for the backdating. Obviously they weren't around back then.