ISA Transfers: Backdating interest to date of cheque no longer common practice?

thrifty_pete

I recently transferred an ISA into Nationwide. It was from a maturing fixed term ISA, so it seems to fall outside of their more generous policy of paying interest from the date of the application.
There is some industry best practice to pay from the date of the cheque, although this might be outdated as it is from 2013: https://assets.publishing.service.gov.uk/media/5ac4cc2040f0b60a4e1b0e4a/Appendices.pdf 

"Interest on the transferred funds should be backdated either to the date on the cheque, inclusive, or to the date which represents ‘day 16’ of the transfer process, inclusive – whichever is earlier"

Is this just something customers have to live with, if the account just happens to be a fixed term account? I don't really see a reason for the interest policy to differ to if I had waited until the account had matured, and then made the transfer.  In that case I would have earned interest from the date of the transfer. I seem to be being penalised for being organised and doing things ahead of time?

TheBanker

I think the practice of transferring ISA funds by cheque is pretty much obsolete these days, unless you're using a really old fashioned provider. 

eskbanker

It's unclear exactly what's happened - have you actually lost out on interest, and been able to work out how?

thrifty_pete

eskbanker said:

It's unclear exactly what's happened - have you actually lost out on interest, and been able to work out how?

I was paid interest by the old provider up until the day before they issued and sent the cheque. Nationwide have credited the money to me new ISA on a date a week later. This is probably within their stated terms and conditions - I am just surprised that it isn't very generous, and also penalises people who plan ahead and request transfers before their old ISA matures. I wouldn't have lost out if I had waited until after the old ISA had matured. 

eskbanker

thrifty_pete said:

eskbanker said:

It's unclear exactly what's happened - have you actually lost out on interest, and been able to work out how?

I was paid interest by the old provider up until the day before they issued and sent the cheque. Nationwide have credited the money to me new ISA on a date a week later. This is probably within their stated terms and conditions - I am just surprised that it isn't very generous, and also penalises people who plan ahead and request transfers before their old ISA matures. I wouldn't have lost out if I had waited until after the old ISA had matured. 

But the date of crediting the account isn't necessarily the start date for earning interest?

thrifty_pete

eskbanker said:

But the date of crediting the account isn't necessarily the start date for earning interest?

In the past, when another building society backdated the deposit to the date of the cheque, that was the date given in the statement (i.e. the date of the cheque). Are you saying that there will be another record conceled from the customer used to calculate interest? That would be confusing. 

eskbanker

thrifty_pete said:

eskbanker said:

But the date of crediting the account isn't necessarily the start date for earning interest?

In the past, when another building society backdated the deposit to the date of the cheque, that was the date given in the statement (i.e. the date of the cheque). Are you saying that there will be another record conceled from the customer used to calculate interest? That would be confusing. 

Not saying there will be but just that there could be - I'm not aware of any mandated standard regarding exactly how to backdate interest, so am simply pointing out that it's valid for an institution to use the statement to record the factually correct date that the funds actually cleared into the account, while separately using the cheque date as part of the initial interest calculation.  The method you refer to is more transparent but arguably less accurate!

epm-84

From my experience this year:

Transfer into Coventry Building Society. Funds credited on date they left old provider's account.

Transfer to Tembo. Funds left old provider's account on Friday before Bank Holiday weekend. Funds credited the following Wednesday.

I asked Tembo customer support and they basically said you can it can take 3 working days to transfer the funds, and we don't give you any interest for those days.