Flexible cash ISA spread across different providers

camclay

Hello. I am new here (Removed by Forum Team).  I have looked on here and there is some stuff related to my question.  I had a "run in" wit Paragon last night.  I had an email from them telling me I could not have a flexible ISA this subscription year with an additional provider. They say I had signed a declaration to say I wouldn't do this!  I have some ISA pots with Paragon from last year and opened a new double access ISA this year AFTER already opening a ZOPA easy access cash ISA this year.  I told them that I believed I had broken no rules and they shouldn't be sending me emails like this.  The agent went on hold and came back and said "we can't enforce it; it's to stop oversubscription and make transfers easier".  I asked how to put it right.  She said I could withdraw the money and put in ZOPA.  I told her this was absolutely against the rules because the money would be counted twice as two different deposits and asked to file a complaint.  I also asked if it was possible to transfer the current ISA money to ZOPA (which already contains money for this year) without this transfer also sucking all the other money from last year in two other Paragon ISA pots over to ZOPA and she didn't know.  A total mess.  I'd be grateful for any advice!  Thanks and apologies if this has been covered multiple times (but that should make it easy to answer or direct me to the answers).  Thanks, (Removed by Forum Team) 

Rich1976

My understanding is that providing you don’t exceed the 20k allowance, you can pay into as many Isa’s as you like, following the change of rules last year.
There are providers that won’t allow you to hold more than one with them but you should still be fine to use other providers. Seems bizarre they have contacted you about this. If you do exceed the allowance then that shouldn’t become their problem.

masonic

As far as I can see you are correct and they are wrong. You are allowed to split your allowance between cash ISAs from multiple different providers. Consumer rights and competition law prohibit a firm interfering with your relationship with any of their competitors.

Flexibly withdrawing from an ISA does not undo the fact you have subscribed to that ISA, so the preferred solution is nonsense.

In short stand firm an please do pursue the complaint to the fullest extent. It would be good to have a Financial Ombudsman decision to wave at these unscrupulous providers in the future.

camclay

Paragon just phoned me and told me that because I opened the Zopa one first this year before depositing funds with them this year, I have to make a cooling off withdrawal from them of this year's funds.  I have told them I believe that their regs are wrong.  But this is what I will do.  They also told me in an email last night that I could not withdraw from last year's funds.  Now my understanding is that if all my funds were with Paragon, a withdrawl uses this year's funds first, then last year's.  However, if this year's money is going to be with ZOPA then I should be able to withdraw from either this year's ZOPA funds or last year's Paragon funds and still replace those funds in the same ISAs from where they came in this financial year.  Am i right?

camclay

Update: Paragon send the subscribed funds for this year back to my bank account.  However my ISA summary still shows those funds as being deducted from my allowance in Paragon.  I feel this complaint escalating......

camclay

And they now say that interest awarded from last year's ISA cannot be re-invested back into that ISA!

badger09

How do Paragon know about your Zopa ISA?

masonic

So they have effectively punished you for entering into lawful consumer relations with a competitor prior to opening your Paragon account and coerced you into agreeing to cancel your ISA with them - an action that cannot be undone. Rates are on their way down so you might not be able to avoid financial losses as a result of their actions. This will require some compensation, so keep that complaint open.

And yes, you are right that ISA flexibility applies to current and prior tax year money.

Barkin

badger09 said:

How do Paragon know about your Zopa ISA?

I wondered that too.

Is there some info missing in this story?

masonic

Reading between the lines (and noticing the OP's other thread), I'd guess a conversation was had about ISA flexibility when holding multiple ISAs where the subject was discussed. The better informed amongst us know that for a trouble free experience you should never enter into a discussion with bank staff about ISAs (as they are so badly informed), but it shouldn't have to be that way.

JSmith321

masonic said:

Reading between the lines (and noticing the OP's other thread), I'd guess a conversation was had about ISA flexibility when holding multiple ISAs where the subject was discussed. The better informed amongst us know that for a trouble free experience you should never enter into a discussion with bank staff about ISAs (as they are so badly informed), but it shouldn't have to be that way.

I've been frankly shocked by the lack of knowledge among banking staff as far as multiple cash ISA's are concerned. The Financial Ombudsman needs to get a grip and warn the institutions if they don't adhere to the ISA rules they will have their banking licence suspended or at least not allowed to offer ISAs.