LloydsTSB Fixed rate Isa 6.5%

derrick

Link to Working Lunch page titled "Paper shuffle delays ISA transfer" mentioning the "30 day rule"

http://news.bbc.co.uk/1/hi/programmes/working_lunch/7355256.stm

dkmax_2

derrick wrote: »

Quote:
But an ISA isn't opened until it's funded according to HMRC

Wrong. You are confusing an ISA as a legal, tax-free wrapper with the underlying account. These are separate notions. Indeed, if you read the HMRC regulations you will note that they do not talk about opening accounts.

You can open as many potential ISA accounts as you like in a tax-year but the ISA (as a legal entity) does not come into existence until a subscription is made to one of them. That is all the HMRC regulations are saying. They do not govern the date at which a bank account is deemed to have been opened (for which normal contract law applies).

sloughflint

You've confused me now dkmax. I responded to you in the other thread and then realised that you had contributed here too ( I liked the Shrodinger reference BTW)

I completely agree with what you are saying here:

dkmax wrote:

You can open as many potential ISA accounts as you like in a tax-year but the ISA (as a legal entity) does not come into existence until a subscription is made to one of them. That is all the HMRC regulations are saying. They do not govern the date at which a bank account is deemed to have been opened (for which normal contract law applies).

Shall we use the word "reserve" rather than "open" from now on?
On that basis, when do you think the 12 months start? What is your interpretation of A1.2?
and the knock on consequences

In summary, the way I see things:

LTSB reserve an account on application date ( allowable by HMRC, can't find the reference but have seen it and if pre 6th April counts as previous tax year )

The account should ( but LTSB staff appear confused about this aspect in their own T&Cs) start when funds hit the account and the 12 month clock should start ticking.

The T&Cs don't mention interest but LTSB have said ( recorded message) that they will backdate interest to date of old providers cheque which they don't have to. Not all providers do this.

Agreed?

carpy

i applied for my fixed rate ISA on 22/3/08 over the phone.

i make that 30 days (near enough anyway!)

do i have a right to complain, given what it states in that bbc article?

should i expect Lloyds to backdate the interest from the 30th day, regardless of how much longer than transfer takes?

KTF

The interest should be backdated to the date on the cheque that was issued by the provider you are transferring in from.

dkmax_2

sloughflint wrote: »

On that basis, when do you think the 12 months start? What is your interpretation of A1.2? and the knock on consequences

Let's just talk it through. LTSB offer an account providing a fixed tiered rate for a 12 month period but when does the clock start?

There are really only two possible dates - the date the account application was accepted or the date that cash first hits the account. In the case of making an initial deposit these occur at essentially the same time so it is only the people transferring in that feel they are missing out. Theoretically this is a 30-day disparity so not huge but not insignificant.

LTSB would say, the clock started on the day you opened it - it isn't their fault that you couldn't deposit cash on that day but could only commit to a transfer. Some people will be able to deposit cash and some won't. Maybe they don't have the cash or maybe they have used their ISA allowance. Either way, LTSB can't be expected to make up for your inability to avail of their offer to the max.

Now, you might object because the transfer takes time and it is out-of-your-control but that's the nature of ISA transfers (which is well understood and something that should have been considered before the application was made) and LTSB can only be held responsible for any delays that they introduce.

I don't think A1.2 pertains to this matter as the same term applies to accounts without any ticking clocks - normal ISAs for example. It is merely describing the nature of an ISA wrapper but in a very sloppy way. I doubt the term could be fairly construed to apply to the 12-month period but it is arguable.

Put it this way - imagine the same FRISA account was offered but without any requirement to deposit up-front or transfer-in - would you still believe you could start the 12-month clock when you made a deposit at some arbitrary time in the future?

egduj

Don't forget that in order to qualify for 6.5%, you had to deposit at least £9000. Therefore, as the maximum allowable is only £3600, it would be impossible to achieve without a transfer.

sloughflint

dkmax wrote: »

There are really only two possible dates - the date the account application was accepted or the date that cash first hits the account.

Yes

In the case of making an initial deposit these occur at essentially the same time so it is only the people transferring in that feel they are missing out.

Yes

Theoretically this is a 30-day disparity so not huge but not insignificant.

Not insignificant and could be more than 30 days for some on this thread.

LTSB would say, the clock started on the day you opened it - it isn't their fault that you couldn't deposit cash on that day but could only commit to a transfer. Some people will be able to deposit cash and some won't.

Very true but if the clock starts ticking from the moment cash is in the account ( transfer or otherwise) along HMRC guidelines then it's not an issue.Everyone is then treated the same.

Put it this way - imagine the same FRISA account was offered but without any requirement to deposit up-front or transfer-in - would you still believe you could start the 12-month clock when you made a deposit at some arbitrary time in the future?

Yes. Partly because because I am going by my ISA with Icesave (variable though) which didn't exist properly until I deposited some money quite some weeks later ( welcome letter only arrived and dated the day funds hit the account)and partly because of the wording in HMRC guidance notes as mentioned further up.

dkmax_2

The existence of the £9000 tier can have no bearing on the ticking clock. It certainly suggests that transfers-in must be permitted but it doesn't say that they must occur early or at all nor that the account clock will wait until it happens.

Delays with the transfer are incidental, although compensation can obviously be sought from whomever is responsible for delays exceeding statutory deadlines, if any.

sloughflint wrote: »

Yes. Partly because because I am going by my ISA with Icesave (variable though) which didn't exist properly until I deposited some money quite some weeks later ( welcome letter only arrived and dated the day funds hit the account)and partly because of the wording in HMRC guidance notes as mentioned further up.

But once again you are taking the ISA regulations and using them to determine when a contract starts. An ISA as a legal entity for a tax-year may not exist without a deposit within that tax-year but an account can do, even one that is destined to become an ISA.

Let's take another LTSB account by way of example; the Monthly Saver - you can see quite clearly that the clock starts when the account opens;

• For a period of 12 months from account opening you can make a monthly payment of between £25 and £250;
• Your first payment must be made within 30 days of account opening;

I'm not saying that the FRISA clock doesn't start ticking until cash hits it but I am saying that the evidence that this is the case is thin. The ISA T&Cs in particular aren't much use as they are the same for ISA accounts that don't have a clock - they are dealing with a separate issue, namely in the invocation of an ISA wrapper.

sloughflint

dkmax wrote: »

But once again you are taking the ISA regulations and using them to determine when a contract starts.

Yes I suppose I was.

Ok then I'll now just specifically home in on these words from the T&Cs:
"Account Opening"Your FRISA will start from the date of your first deposit

and keep that precious letter of mine from LTSB;)