Calculating cash ISA transfer delay and where to pay compensation

rabbituk

I've had a delayed cash ISA transfer occur for a rather large amount. The transfer was delayed at the stage where the old manager sends the funds (step 2 in TISA process table). However the delay principally appears to be caused by the new manager ignoring a 'Ready to Send funds' message from old provider.

Looking at the TISA and HMRC guidelines, they say 'up to' 5 business days for each of the stages. So if stage 1 completes immediately and stage 2 starts on the same day, then that doesn't mean stage 2 can be allowed to take up to 5+5=10 business days because stage 1 was completed quickly. The new ISA manager simply says 15 business days and consequently gets a different delayed days figure than I do by using the 'up to 5 days' rule.

Also they don't seem happy to add the lost interest amount to the ISA wrapper. HMRC do allow this without affecting the subscription limits. It seems only fair to do this so that it was as if this delay never occurred financially. I had something similar with Santander about 10 years ago where they forgot to apply a bonus rate on an ISA and refused to pay the lost interest into the ISA. I took that case to the ombudsman but they simply parroted what Santander said to me and so I felt that it was biased process and dropped that case.

eskbanker

rabbituk said:

Looking at the TISA and HMRC guidelines, they say 'up to' 5 business days for each of the stages. So if stage 1 completes immediately and stage 2 starts on the same day, then that doesn't mean stage 2 can be allowed to take up to 5+5=10 business days because stage 1 was completed quickly. The new ISA manager simply says 15 business days and consequently gets a different delayed days figure than I do by using the 'up to 5 days' rule.

Rather than relying on guidance, it's probably best to refer to the actual legislation:

https://www.legislation.gov.uk/uksi/1998/1870/regulation/21A

However, if you continue to struggle to get the receiving provider to accept your assertions, after a formal complaint, then FOS will be your only realistic option, regardless of your misgivings, unless you're prepared to pursue the matter to court - what's the gap between your figure and theirs?

rabbituk

what's the gap between your figure and theirs?

The disagreement difference in delayed days with the difference in interest rate equates to an amount of not more than £20 so not worth taking to court, even small claims. More irritating than anything.

Is there any legislation regarding where the lost interest must be paid? It seems incorrect to not keep it within the ISA account - unless requested.

masonic

rabbituk said:

what's the gap between your figure and theirs?

The disagreement difference in delayed days with the difference in interest rate equates to an amount of not more than £20 so not worth taking to court, even small claims. More irritating than anything.

Is there any legislation regarding where the lost interest must be paid? It seems incorrect to not keep it within the ISA account - unless requested.

The receiving provider would be free to backdate interest within the ISA, and several do as a matter of course even for transfers within the time limit. However, compensation could only be added as a new subscription, subject to the allowance.

rabbituk

masonic said:

rabbituk said:

what's the gap between your figure and theirs?

The disagreement difference in delayed days with the difference in interest rate equates to an amount of not more than £20 so not worth taking to court, even small claims. More irritating than anything.

Is there any legislation regarding where the lost interest must be paid? It seems incorrect to not keep it within the ISA account - unless requested.

The receiving provider would be free to backdate interest within the ISA, and several do as a matter of course even for transfers within the time limit. However, compensation could only be added as a new subscription, subject to the allowance.

Is this a roundabout way of saying that there is no legislation and it is entirely at the provider's discretion?

masonic

rabbituk said:

masonic said:

rabbituk said:

what's the gap between your figure and theirs?

The disagreement difference in delayed days with the difference in interest rate equates to an amount of not more than £20 so not worth taking to court, even small claims. More irritating than anything.

Is there any legislation regarding where the lost interest must be paid? It seems incorrect to not keep it within the ISA account - unless requested.

The receiving provider would be free to backdate interest within the ISA, and several do as a matter of course even for transfers within the time limit. However, compensation could only be added as a new subscription, subject to the allowance.

Is this a roundabout way of saying that there is no legislation and it is entirely at the provider's discretion?

There is legislation. Money paid into an ISA is treated as a subscription and counts towards the annual allowance. Interest paid within an ISA is not.

Therefore you need them to backdate the interest rather than pay you compensation ideally.

eskbanker

masonic said:

rabbituk said:

masonic said:

rabbituk said:

what's the gap between your figure and theirs?

The disagreement difference in delayed days with the difference in interest rate equates to an amount of not more than £20 so not worth taking to court, even small claims. More irritating than anything.

Is there any legislation regarding where the lost interest must be paid? It seems incorrect to not keep it within the ISA account - unless requested.

The receiving provider would be free to backdate interest within the ISA, and several do as a matter of course even for transfers within the time limit. However, compensation could only be added as a new subscription, subject to the allowance.

Is this a roundabout way of saying that there is no legislation and it is entirely at the provider's discretion?

There is legislation. Money paid into an ISA is treated as a subscription and counts towards the annual allowance. Interest paid within an ISA is not.

Therefore you need them to backdate the interest rather than pay you compensation ideally.

Isn't it the case that the ISA regulations only specify the transfer timescales, but don't include anything to define redress in the event of these not being met, so there isn't really a concept of 'lost interest' automatically being reimbursable, and OP is just relying on more general legal principles regarding losses arising from breach of contract, and so effectively has to negotiate the most tax-advantageous outcome (putting to one side that we're only talking about a few quid of tax!)?

masonic

eskbanker said:

masonic said:

rabbituk said:

masonic said:

rabbituk said:

what's the gap between your figure and theirs?

The disagreement difference in delayed days with the difference in interest rate equates to an amount of not more than £20 so not worth taking to court, even small claims. More irritating than anything.

Is there any legislation regarding where the lost interest must be paid? It seems incorrect to not keep it within the ISA account - unless requested.

The receiving provider would be free to backdate interest within the ISA, and several do as a matter of course even for transfers within the time limit. However, compensation could only be added as a new subscription, subject to the allowance.

Is this a roundabout way of saying that there is no legislation and it is entirely at the provider's discretion?

There is legislation. Money paid into an ISA is treated as a subscription and counts towards the annual allowance. Interest paid within an ISA is not.

Therefore you need them to backdate the interest rather than pay you compensation ideally.

Isn't it the case that the ISA regulations only specify the transfer timescales, but don't include anything to define redress in the event of these not being met, so there isn't really a concept of 'lost interest' automatically being reimbursable, and OP is just relying on more general legal principles regarding losses arising from breach of contract, and so effectively has to negotiate the most tax-advantageous outcome (putting to one side that we're only talking about a few quid of tax!)?

There's certainly no mandated form of redress, so that's for negotiation. Above is therefore guidance on how to steer that. Backdating interest is a widely accepted practice, and I believe mentioned in the best practice guidance many ISA managers signed up to years ago.

rabbituk

masonic said:

rabbituk said:

masonic said:

rabbituk said:

what's the gap between your figure and theirs?

The disagreement difference in delayed days with the difference in interest rate equates to an amount of not more than £20 so not worth taking to court, even small claims. More irritating than anything.

Is there any legislation regarding where the lost interest must be paid? It seems incorrect to not keep it within the ISA account - unless requested.

The receiving provider would be free to backdate interest within the ISA, and several do as a matter of course even for transfers within the time limit. However, compensation could only be added as a new subscription, subject to the allowance.

Is this a roundabout way of saying that there is no legislation and it is entirely at the provider's discretion?

There is legislation. Money paid into an ISA is treated as a subscription and counts towards the annual allowance. Interest paid within an ISA is not.

Therefore you need them to backdate the interest rather than pay you compensation ideally.

How does back dating interest work given that I would have already been earning interest at the previous provider albeit at a lower rate? I assume that they would not like to put me in the fortunate position of earning interest at both providers simultaneously

masonic

rabbituk said:

masonic said:

rabbituk said:

masonic said:

rabbituk said:

what's the gap between your figure and theirs?

The disagreement difference in delayed days with the difference in interest rate equates to an amount of not more than £20 so not worth taking to court, even small claims. More irritating than anything.

Is there any legislation regarding where the lost interest must be paid? It seems incorrect to not keep it within the ISA account - unless requested.

The receiving provider would be free to backdate interest within the ISA, and several do as a matter of course even for transfers within the time limit. However, compensation could only be added as a new subscription, subject to the allowance.

Is this a roundabout way of saying that there is no legislation and it is entirely at the provider's discretion?

There is legislation. Money paid into an ISA is treated as a subscription and counts towards the annual allowance. Interest paid within an ISA is not.

Therefore you need them to backdate the interest rather than pay you compensation ideally.

How does back dating interest work given that I would have already been earning interest at the previous provider albeit at a lower rate? I assume that they would not like to put me in the fortunate position of earning interest at both providers simultaneously

There's no harm in trying. I've been successful in the past in doing just that. It is easier than figuring out some differential rate and will no doubt make you happy. Possibly would also allow you to meet them on the number of days disagreement.

intalex

Doesn't the process involve communication of a date by the old provider to the new one, which implies that interest has been paid/accrued up to that date on the transfer amount and the funds have been debited from the customer's account (i.e. no longer earning interest with the old provider as of that date) and made available to "collect" by the new provider who then becomes "responsible" (obliged?) to start accruing interest from that same date?