Transfer cash between 2 S&S ISAs and "broker might need to sell shares" question

Alexland

Ulrich said:

In practice (happened just now) I receive an email/a message/a call from B2 and they ask me to confirm the transfer.
So I'd say in case of cash transfers it makes no difference but B1 is adamant the clause is needed and I don't understand the logic.

It's because not all S&S ISA investors are in your position of having enough cash balance in their accounts. For example there are some S&S ISAs that are not aimed at the DIY market where there is no concept of an account cash balance the money in the account is 100% invested at all times and if you are lucky you might get to adjust the portfolio risk level or maybe change the % allocations between funds but that's about it.

Some ISA providers might still check the transfer and/or sell request with the customer and others just perform the sale and transfer trusting the new ISA Manager to have performed the required ID checks etc. Some might still double check the paper form with the signature they already have on record. Others will be happy with an electronic form.

There's a lot of variety in how providers handle transfers but their transfer forms tend to be designed to try and cover multiple situations (learning from the past experiences) not just your situation. If they had lots of similar forms for each situation they would then need to publish a guide as to which form to use and loads of customers would probably still end up filling in the wrong form or not ticking the right box etc. It's fine if appropriate caveats are in place.

masonic

Ulrich said:

masonic said:

Ulrich said:

I'd expect a cash transfer to fail in case there is not enough money in my account or be completed successfully otherwise.

Once a transfer instruction is received, the sending ISA manager is obliged to complete it if it is possible to do so. One ISA manager cannot impose additional terms on a second ISA manager regarding how they fulfil the request, or make any promises to you, as they are not in possession of the relevant facts. You can, as advised, discuss it with the sending provider directly.

The receiving ISA manager is not obliged to accept a transfer instruction that doesn't conform to its requirements. They are allowed not to support certain types of transfer.

Do you have the option to transfer a specific holding in specie? That would be a workaround.

Your last question kinda makes me think we're talking about different things.
I want to transfer cash form one broker to another.
What I'm not happy about is the clause allowing the receiving ISA manager to sell my shares and I don't understand the reasoning behind the sending ISA manager's decision to add that clause.
In fact, I feel like they are trying to cover themselves up from potential claims while making me responsible for any unfavourable outcomes.

Transferring a holding in specie would avoid the issue of allowing the sending ISA manager to sell your shares. It is the receiving ISA manager that has added the clause for practical reasons.

They have every right to cover themselves against potential claims relating to the actions of a third party (whether that's you or the sending ISA manager). You should be responsible for any unforeseen outcomes that would result in the clause needing to be used. If it is because of an accounting error on the part of your ISA provider, then they could be held responsible. Same as if a direct debit fails due to insufficient balance.

If you really cannot accept taking on the risk that you might invest or withdraw the cash (or have fees deducted etc) between submitting the transfer instruction and the money being moved, then a transfer in specie would avoid that, since you would not need to specify a cash amount, and no amount of shares sold would make the transfer viable if it could not be completed without selling shares. I can guarantee you will not need to agree to the sending ISA manager purchasing more shares if the holding was sold between submitting the instruction and the transfer being made.

Ulrich

masonic said:

Ulrich said:

masonic said:

Ulrich said:

I'd expect a cash transfer to fail in case there is not enough money in my account or be completed successfully otherwise.

Once a transfer instruction is received, the sending ISA manager is obliged to complete it if it is possible to do so. One ISA manager cannot impose additional terms on a second ISA manager regarding how they fulfil the request, or make any promises to you, as they are not in possession of the relevant facts. You can, as advised, discuss it with the sending provider directly.

The receiving ISA manager is not obliged to accept a transfer instruction that doesn't conform to its requirements. They are allowed not to support certain types of transfer.

Do you have the option to transfer a specific holding in specie? That would be a workaround.

Your last question kinda makes me think we're talking about different things.
I want to transfer cash form one broker to another.
What I'm not happy about is the clause allowing the receiving ISA manager to sell my shares and I don't understand the reasoning behind the sending ISA manager's decision to add that clause.
In fact, I feel like they are trying to cover themselves up from potential claims while making me responsible for any unfavourable outcomes.

Transferring a holding in specie would avoid the issue of allowing the sending ISA manager to sell your shares. It is the receiving ISA manager that has added the clause for practical reasons.

They have every right to cover themselves against potential claims relating to the actions of a third party. You should be responsible for any unforeseen outcomes that would result in the clause needing to be used. It is your responsibility to ensure the balance is sufficient for shares not to be sold. If you want to avoid taking on that responsibility, then a transfer in specie would avoid that, since if you would not need to specify a cash amount and no amount of shares sold would make the transfer viable if it could not be completed without selling shares.

sorry, I need to repeat myself - I want to leave my shares with the sending manager and only transfer cash that is currently with them to the receiving manager.

masonic

Ulrich said:

masonic said:

Ulrich said:

masonic said:

Ulrich said:

I'd expect a cash transfer to fail in case there is not enough money in my account or be completed successfully otherwise.

Once a transfer instruction is received, the sending ISA manager is obliged to complete it if it is possible to do so. One ISA manager cannot impose additional terms on a second ISA manager regarding how they fulfil the request, or make any promises to you, as they are not in possession of the relevant facts. You can, as advised, discuss it with the sending provider directly.

The receiving ISA manager is not obliged to accept a transfer instruction that doesn't conform to its requirements. They are allowed not to support certain types of transfer.

Do you have the option to transfer a specific holding in specie? That would be a workaround.

Your last question kinda makes me think we're talking about different things.
I want to transfer cash form one broker to another.
What I'm not happy about is the clause allowing the receiving ISA manager to sell my shares and I don't understand the reasoning behind the sending ISA manager's decision to add that clause.
In fact, I feel like they are trying to cover themselves up from potential claims while making me responsible for any unfavourable outcomes.

Transferring a holding in specie would avoid the issue of allowing the sending ISA manager to sell your shares. It is the receiving ISA manager that has added the clause for practical reasons.

They have every right to cover themselves against potential claims relating to the actions of a third party. You should be responsible for any unforeseen outcomes that would result in the clause needing to be used. It is your responsibility to ensure the balance is sufficient for shares not to be sold. If you want to avoid taking on that responsibility, then a transfer in specie would avoid that, since if you would not need to specify a cash amount and no amount of shares sold would make the transfer viable if it could not be completed without selling shares.

sorry, I need to repeat myself - I want to leave my shares with the sending manager and only transfer cash that is currently with them to the receiving manager.

I am suggesting that you take that cash, buy a money market fund or similar, transfer that single holding in specie, then sell it on the other side. Then none of your other shares could be touched as a result of the transfer. It's an irrational course of action I know, but sometimes that is what is required to dispel an irrational concern and achieve your end objective.

Another option is to use a cash ISA as an intermediate account, as it is far less likely a cash ISA provider would have such a condition. That would be slower, but may be preferable if the trading above would cost you anything.

Ulrich

masonic said:

Ulrich said:

masonic said:

Ulrich said:

masonic said:

Ulrich said:

I'd expect a cash transfer to fail in case there is not enough money in my account or be completed successfully otherwise.

Once a transfer instruction is received, the sending ISA manager is obliged to complete it if it is possible to do so. One ISA manager cannot impose additional terms on a second ISA manager regarding how they fulfil the request, or make any promises to you, as they are not in possession of the relevant facts. You can, as advised, discuss it with the sending provider directly.

The receiving ISA manager is not obliged to accept a transfer instruction that doesn't conform to its requirements. They are allowed not to support certain types of transfer.

Do you have the option to transfer a specific holding in specie? That would be a workaround.

Your last question kinda makes me think we're talking about different things.
I want to transfer cash form one broker to another.
What I'm not happy about is the clause allowing the receiving ISA manager to sell my shares and I don't understand the reasoning behind the sending ISA manager's decision to add that clause.
In fact, I feel like they are trying to cover themselves up from potential claims while making me responsible for any unfavourable outcomes.

Transferring a holding in specie would avoid the issue of allowing the sending ISA manager to sell your shares. It is the receiving ISA manager that has added the clause for practical reasons.

They have every right to cover themselves against potential claims relating to the actions of a third party. You should be responsible for any unforeseen outcomes that would result in the clause needing to be used. It is your responsibility to ensure the balance is sufficient for shares not to be sold. If you want to avoid taking on that responsibility, then a transfer in specie would avoid that, since if you would not need to specify a cash amount and no amount of shares sold would make the transfer viable if it could not be completed without selling shares.

sorry, I need to repeat myself - I want to leave my shares with the sending manager and only transfer cash that is currently with them to the receiving manager.

I am suggesting that you take that cash, buy a money market fund or similar, transfer that single holding in specie, then sell it on the other side. Then none of your other shares could be touched as a result of the transfer. It's an irrational course of action I know, but sometimes that is what is required to dispel an irrational concern.

wow. it's way too much for a simple cash transfer.
and above all, I'm really surprised why in situation when "often other broker sold shares without permission" they make me agree for a potential sale of shares despite it being a cash transfer and say it's to avoid such situations in the future - but how?
that's exactly what I'd call irrational.
oh well. maybe that's because I'm not in financial services

masonic

It's not a simple cash transfer, because your account contains mixed assets and you are specifying a cash amount which may or may not be present on the day of the transfer. The receiving ISA manager (whose form you are using) cannot make any assurances about what will happen if the balance is insufficient on that day due to the actions or inactions of third parties (including yourself), but they are aware of this possibility, so they are informing you and saying that you can proceed at your own risk. Such waivers are not unique to financial services.

Alexland

Ulrich said:
I'm really surprised why in situation when "often other broker sold shares without permission" they make me agree for a potential sale of shares despite it being a cash transfer and say it's to avoid such situations in the future - but how?

Their explanation wasn't great but I think it's just a case of accepting that standard transfer forms that capture such an agreement upfront, on the basis of only being used where needed, are helpful to some customer situations where a sale is needed and not relevant to other situations such as yours where you tell us that your arrangements with the old provider mean it is not needed.

Ulrich

@Alexland
@masonic
Here's my real life example (all dates and amounts are for illustration purposes only):
Some prerequisites:
- B1 only allow 2 active transfers at any time
- it takes B2 AT LEAST 30 days to transfer money

I submitted a cash transfer request for £250 (T1) from B2 on 3 Jan 2025 as I had £250 with them on that date.
Soon after that on the same date I received £50 in my account with B2.
I went ahead and cancelled T1 and submitted another cash transfer request for £300 (T2).
The next day (4 Jan) I received another £100 in my account with B2.
I cancelled T2 and submitted another cash transfer request for £400 (T3).

On 15 Jan B2 contact me asking to confirm a £250 transfer to B1. Knowing that I have only one active transfer request with B1, I don't check the amount and ask B2 to go ahead with that transfer.
On 16 Jan B2 get back to me saying that I also requested another transfer for £300 (on top of the £250) but my account only holds £400.
I asked B2 to provide me with the list of all active transfers to B1 they currently have and here it is:
- £250 received on 4 Jan (on 16 Jan they received a cancellation notice from B1)
- £300 received on 4 Jan
- £400 received on 5 Jan

So basically it's a mess.
I was lucky that B2 contacted me instead of simply "executing" all active transfers, that required more cash than was available and therefore would've required them to sell some of my shares (and they have that permission so could do that without contacting me).

They all are clumsy and that is exactly why I am not happy to give them more permission that required because otherwise it's a recipe for all sorts of issues, big and small.

It would not be easy to find out who did what wrong in this situation (even without B2 selling shares) as normally both parties would insist it's the other party's fault.

Alexland

Yeah I don't think ISA Manager processes cope well with partial transfer requests being repeatedly cancelled and resubmitted due to a growing account balance in the old account.

It's best to wait until the money you intend to partial transfer is ready and cleared in the old account before submitting the transfer request else you risk the scheduling issue where they start progressing the new transfer request before stopping work on the previous transfer request.

booneruk

If I wanted to completely confuse my ISA providers during a transfer, making a bunch of transfer requests and cancelling them before making more would be the way to do it!