Chip Smart Cash ISA - Beware this condition...

ScoobyZ

jJst managed to cancel a transfer to chip after reading some bad reviews on trust pilot.

One was about this interest loss and another saying taking ages to leave. I’m guessing they can delay to get maximum interest withheld.

w0z

The electronic ISA transfer system does not delay, in fact when it works which is most of the time, transfers can finalise in 2 days.

There may be instances where there have been delays due to manual intervention being necessary (for many reasons) but, and it's only my opinion, I think it's highly unlikely that Chip are deliberately delaying transfers.There will (I hope) be more instances of transfers happening quickly, (one already confirmed in a previous post). That would tend to indicate no deliberate delay.

Just to add I have no skin in the game as I've decided for the moment not for the moment to fund my ISA

I would just add that if you have some cash in the ISA on which you are able and prepared to lose the ISA wrapper status* and/or better still you have some allowance left which you can use, the loss of interest can be mitigated by withdrawing all but £1, and leaving the account until the interest is paid. It's a very niche way of avoiding the loss of interest and you have to be in a position to be prepared to lose the ISA status on that cash *which will still count towards your annual ISA contribution. Also it isn't a one way deal, if you change your mind you can always put the cash back into the ISA (in the same tax year) as it's flexible.

(*Of course I'm not recommending that course of action as it will only suit very few people, but it is a way around the loss of interest)

winkowinko

I dunno. Their decision not to pay interest for the month in which you transfer out seems like a calculated one. The only people who stand to gain from it are them. You have to wonder why else they have now inserted this new clause.

Maybe all transfers are completed within a couple of days, and the only people who get caught out are those who haven't read the T's and C's and haven't waited until just after the 10th working day of the month before initiating the transfer. In which case it's fair enough, even if a little sneaky.

Do I want to risk opening an ISA with them right now? Not really.

sweaty_doughnut

For anyone stuck in the Smart Cash ISA because of this exit penalty: I have sent Chip a formal complaint arguing the term may be unfair under the Consumer Rights Act 2015 and doesn't meet the FCA's Consumer Duty. If they don't resolve it, I'll take it to the Financial Ombudsman Service, report the unfair terms to the FCA and send a story to the media.

Moreover, the loss of interest is not 10-31 days, it's 14 to 43 days because i.e. interest for september is paid on 14th of October so you start with a loss of at least 2 weeks. On £100k this can be a loss of up to ~£500 if you lose 43 days. This is unfair business practice and you will always end up worse off comparing to another best ISA deal from a competitor no matter how good the rate with Chip is. MSE should not ever promote their deals under these T&C.

My main points are that the penalty isn't linked to any cost Chip incurs (their own Summary Box says they keep the difference between what the partner banks pay and what we receive). The amount also depends on timing rather than balance. And it undermines the right to close the account after a rate cut, because closing triggers the penalty.

If you're affected, please start and official complain too. The more of us raise it, the harder it is for Chip to treat it as a one-off:

• Complain before you transfer. Ask them to confirm in writing that the penalty will be waived and that you'll get all accrued interest up to the transfer date.
• Chip has 8 weeks to send a final response. After that, you have 6 months to go to the Ombudsman, which is free.
• Report it to the FCA through its website. They don't handle individual complaints, but they do use customer reports.
• If you have to transfer anyway, start it right after interest is paid on the 10th business day to keep your loss as small as possible.
• Use ChatGPT/Gemini if needed to write complaint FCA and FOS.

satoritree

All I can say is that Chips is operating an exit penalty and essentially charging you to transfer from their Smart ISA.

This works in the following way. They calculate interest from the 1st day of the month to the last day and then pay that pending interest on the 10th working day of the following month.

Best case scenario is that a transfer is begun as soon as the interest is paid bearing in mind that 10 days of interest for that month as already accrued as pending interest but this would not be added to the final balance.

This process of waiting 10 working days until accrued interest from the previous month is paid is designed as an exit penalty and should be declared as such.

Consequently they are being reported to the FCA for unfair trading practices.

Martin should be on the case about this devious practice but seems more interested in promoting a company that is operating a scam to steal people's money.

Bear in mind their transfer process can take up to 14 days so essentially 24 days of interest could be forfeited which goes straight into their bank account. Your money, your interest, into their bank account for having the temerity to transfer your ISA nest egg.

I've been trying to get a straight answer of these guys for a few days now and they are now ghosting me because they know as soon as EXIT PENALTY is forced on to the front page of their website, then people will walk on by.

sweaty_doughnut

https://forums.moneysavingexpert.com/discussion/comment/82159786#Comment_82159786

Just to add a small correction to your statement as my wife and I are both affected by this. It's minimum of 14 calendar days loss of interest and up to 43 days. I have already reported to FCA, CMA, reached out to media and my wife has opened a case with FOS. I think Chip needs to be pressed on this as such unfair rules need to be challenged. I have never seen something like this in an ISA in 17 years.

superleeds27

https://forums.moneysavingexpert.com/discussion/comment/82163464#Comment_82163464

Let us know how you get on with it! I noticed in the T&C's it states:

If you close your Cash ISA or transfer your Cash ISA to a different provider Chip will charge an exit penalty consisting of any unpaid interest on your deposits.

I was thinking of moving from Monument (4.28%) to Chip (4.72%)