Being denied 14 day cooling off cancellation after transferring money into new Tembo Cash ISA

Mogglegg

I'm new to transferring Cash ISAs but have a situation where Tembo (a Cash ISA account recommended by MSE) are not allowing me to cancel a Cash ISA transfer when I've been advise that they legally have to do it within 14 days. To explain:

I have a Paragon Bank Cash ISA account that matures on 2nd April 2025 & was informed that a transfer takes 15 days to complete from various spources. I therefore arranged for a transfer on 17th March 2025 through the Tembo app but it completed early on 22nd March 2025! As a result I've incurred a hefty penalty of lost interest for transferring before the Paragon account's maturation date. Having rung up Paragon yesterday they advised me that I should have ticked the option for the transfer to happen on the maturation date BUT I didn't see such an option when filling in the transfer form on the Tembo app. Paragon therefore advised me of the legally requried 14 days cooling off period for Cash ISA transfers & suggested I cancel that transfer so that the money could return to the Paragon account & the interest penalty would be removed. Then I can redo the transfer & (hopefully) find this option to have the transfer happen on the maturation date. However.... Tembo are now saying that they can't cancel the transfer as the money's already in their Cash ISA account! 

Please can someone advise me as to whether the 14 day cooling off period is required by law in this situation (maybe supply a link proving that if poss?) and that I'm within my rights to demand they cancel the transfer.

FYI: I opened the Tembo account on 17th March when I made the orginal transfer so I'm still within the 14 day cooling off period for both A) the opening of the account & the transfer in from Paragon. It's also most frustrating that Tembo claim they get typically get back within 4 business hours when in reality they take 24hrs to do so...hence delaying the resolution of my issue! 

dunstonh

Tembo are now saying that they can't cancel the transfer as the money's already in their Cash ISA account! 

That is not the same thing as cancellation rights.

They cannot cancel the transfer as that has already happened.   However, you want to exercise your right to cancel the purchase of the new ISA.  Go back to them and tell them that you wish to exercise your cancellation rights and have the money returned to Paragon.

eskbanker

You can cancel the opening of a cash ISA within 14 days:

https://www.handbook.fca.org.uk/handbook/COBS/15/2.html

If doing so after a transfer has been completed, then the funds should be returned to the originating provider.

Mogglegg

dunstonh said:

Tembo are now saying that they can't cancel the transfer as the money's already in their Cash ISA account! 

That is not the same thing as cancellation rights.

They cannot cancel the transfer as that has already happened.   However, you want to exercise your right to cancel the purchase of the new ISA.  Go back to them and tell them that you wish to exercise your cancellation rights and have the money returned to Paragon.

Thanks for your comment. However, if i cancel the new ISA account will I still be able to open up a new ISA Account with Tembo? or the fact that I've closed this account means I wont be able to 'start again from fresh' & open a new account with them? Would be so much easier if they cancelled the transfer & I kept the account open & just redid the transfer

Kim_13

I’m not certain of the answer, but I have a Lifetime ISA that I transferred elsewhere. During that process, the opening date was preserved, so if there isn’t a cancellation right then it would be for that reason - as the 14 day period applied to the original Paragon account which has long since expired. However, the Lifetime ISA is its own type of ISA so I would be happy to be proved wrong in that this doesn’t happen with Cash ISAs.

Are you able to open up another copy of the Tembo transfer form? Regardless of whether you legally have a right to cancellation or not, if the option to carry out the transfer on the maturity date is not there, they would have no choice but to reverse the transaction as their failure to include a standard option would have directly caused the penalty. If this isn’t possible for procedural reasons, then they should reimburse you the lost interest.

They don’t offer a fixed ISA, so it’s obviously Easy Access - and even if it was fixed, they have to allow access to the funds early for a penalty. They can return the funds to Paragon, they just don’t WANT to. If it turns out to be impossible to get them to do it via cancelling of voiding the transfer, see if Paragon will agree to reinstate the lost interest if you instruct a transfer back to them yourself. Get any agreement in writing. But exhaust the other avenues first.

If none of the above work and Tembo’s form was lacking and they won’t reimburse the lost interest, complain formally and proceed to the FOS if necessary.

eskbanker

Kim_13 said:

Are you able to open up another copy of the Tembo transfer form? Regardless of whether you legally have a right to cancellation or not, if the option to carry out the transfer on the maturity date is not there, they would have no choice but to reverse the transaction as their failure to include a standard option would have directly caused the penalty. If this isn’t possible for procedural reasons, then they should reimburse you the lost interest.

[...]

If none of the above work and Tembo’s form was lacking and they won’t reimburse the lost interest, complain formally and proceed to the FOS if necessary.

If there is a requirement to include a 'transfer after maturity' option on ISA transfer forms, where is this mandated?

Mogglegg

eskbanker said:

Kim_13 said:

Are you able to open up another copy of the Tembo transfer form? Regardless of whether you legally have a right to cancellation or not, if the option to carry out the transfer on the maturity date is not there, they would have no choice but to reverse the transaction as their failure to include a standard option would have directly caused the penalty. If this isn’t possible for procedural reasons, then they should reimburse you the lost interest.

[...]

If none of the above work and Tembo’s form was lacking and they won’t reimburse the lost interest, complain formally and proceed to the FOS if necessary.

If there is a requirement to include a 'transfer after maturity' option on ISA transfer forms, where is this mandated?

Good point! Where is the requirement to include a 'transfer on/after maturity' option on a Cash ISA transfer form mandated?

sammy_zammy

Your sources likely told you it can take up to 15 days from the day it starts. They are free to initiate the transfer from the day you request it starts. Which it appears they did. Not all banks provide the option to transfer on a specific date, and if so you should assume the transfer starts when you request it.

Even if it was accurate that it takes 15 days without fail, at some point within those 15 days your money will not be in the original account, as it will be in the process of being transferred. That’s why it takes up to 15 days in the first place, because the transfer isn’t instant. It’s not like they spend 14 days twiddling their thumbs and then do it all on the final day…

If your money is in a fixed rate ISA, you don’t touch it at all until the fixed term has ended.

eskbanker

Mogglegg said:

eskbanker said:

Kim_13 said:

Are you able to open up another copy of the Tembo transfer form? Regardless of whether you legally have a right to cancellation or not, if the option to carry out the transfer on the maturity date is not there, they would have no choice but to reverse the transaction as their failure to include a standard option would have directly caused the penalty. If this isn’t possible for procedural reasons, then they should reimburse you the lost interest.

[...]

If none of the above work and Tembo’s form was lacking and they won’t reimburse the lost interest, complain formally and proceed to the FOS if necessary.

If there is a requirement to include a 'transfer after maturity' option on ISA transfer forms, where is this mandated?

Good point! Where is the requirement to include a 'transfer on/after maturity' option on a Cash ISA transfer form mandated?

It's likely to be academic anyway - ultimately you instructed Tembo to initiate the transfer and they followed that instruction, so I think you'd struggle to make any case that they've breached anything.

Unless anyone comes up with an authoritative citation to the contrary, I also don't believe that there's any requirement (or even capability) to void a completed transfer, other than in the context of reversing an account's opening during the cooling-off period, so continue to see account cancellation as the only realistic option on the table....

Canny_mal

I recently had a 1-year fixed rate cash ISA mature with Oaknorth. They wrote to me ahead of the maturity date with a variety of options. One if which was to initate an ISA transfer to another provider. They said i could request the transfer before the matuity date but they wouldn't send the funds until the maturity date. I appreciated this approach as it ment i didn't have to wait until the maturity date to begin the transfer process which would have ment i'd have lost up to 3 weeks worth of interest because Oaknorth would have moved my ISA to an account paying just 0.1% interest on the maturity date is i hadn't of arranged a transfer or reinvested in another fixed rate ISA with Oaknorth. 

Kim_13

I’ve never seen an ISA Transfer Form that didn’t ask whether the subscriber wanted the transfer to be actioned straight away, or following maturity or a notice period. The wording was either word for word or near word for word, so I inferred from that that it must be mandated somewhere, though either way that’s enough for standard across the interest industry in my eyes - and nothing to lose by trying. 

No luck so far, though I did come across this from The Investing and Saving Alliance:  https://www.tisa.uk.com/wp-content/uploads/2023/03/Cash-to-Cash-ISA-5-Transfer-Industry-Guidelines.pdf . There is a model form and the standard wording appears on Page 9.

Government guidance to ISA managers even prompts them that fixed and notice products may carry penalties and that they can contact the customer and accept a revised transfer instruction - so proceeding with a transfer from such a product (given the wording, it sounds as though they would find out what type of ISA it is before anything starts) without the informed consent (such as via the carry out as soon as possible - I accept the penalty box) of the customer feels underhand. But given that their notice period for rate reductions appears to be 1 day, maybe Tembo don’t care all that much for best practice.

The same guidance page covers right of withdrawal and cancellation, from which it seems that Tembo are perfectly entitled not to have had the right of withdrawal (which would have delayed the transfer, potentially to the point of avoiding the penalty) and to use cancellation instead, which doesn’t cancel the transfer but only the product you have with them. So Tembo would be obliged to return the ISA to Paragon, but Paragon wouldn’t be obliged to return the lost interest upon receipt of the ISA as the transfer is still treated as having happened (but may do so as a gesture of goodwill.)

https://www.gov.uk/guidance/transfer-an-isa-if-youre-an-isa-manager#cash-isa-transfers