ISA Transfer Is A Lottery

Oblivion

As witnessed by various threads in these forums and raised in some recent TV money programs, the right to transfer your ISA between providers is written into the Government's legal framework for operating ISAs. But, when it comes down to practice however, the likelihood of a successful transfer is at best a lottery and in many cases a complete farce.

It is time for the Government to make some serious changes to this ludicrous situation. I would suggest ...

1. No financial institution should be allowed to provide ISAs unless they agree to accept transfers (far too many currently don't); and that should include the Treasury's own National Savings & Investments.

2. Any financial institute failing to complete a transfer within the specified period should be fined heavily ... that fine going to the depositor. I know, proof of who was at fault, the old or new provider, is a potential stumbling block, but this should be capable of being provable by proper system controls.

Anyone care to add to this?

debbie42

I can't help but think that if the institutions were forced to accept transfers in then the rates wouldn't be as good, overall.

As to the other suggestion well, yes, that would be nice, but I'm having to duck to avoid this squadron of pigs that seem to be flying overhead.

Cynical, moi?

RayWolfe

Oblivion wrote: »

But, when it comes down to practice however, the likelihood of a successful transfer is at best a lottery and in many cases a complete farce.

Is it?
Of the millions of transfers that happen every year, how many bad ones are there? We obviously only hear about the problems here and would you want to read a press story headed: "ISA Transfer Completed Without a Hitch" full story on pages 5,6,9 & 12
Of course some people have problems and they should be raised and put right but an awful lot of "stories" consist of "I requested the transfer of my ISA at 23:47 on 5th April and XYZ Bank changed the rate on 6th. Can I get my money back?"

Oblivion

debbie42 wrote: »

I can't help but think that if the institutions were forced to accept transfers in then the rates wouldn't be as good, overall.

I don't quite follow that logic debbie. Surely any new deposit is good news to a financial institution, whether it be "new" money or "old" money transferred from another rival financial institution, or have I missed your point?

Surely, as long as there is competition for deposits, interest rates will stay competitive, no matter where the money comes from.

Paul_Herring

Oblivion wrote: »

I don't quite follow that logic debbie. Surely any new deposit is good news to a financial institution, whether it be "new" money or "old" money transferred from another rival financial institution, or have I missed your point?

The interest at (say) 6.9% due on £3,600 is much less for the banks to pay out than the interest due on £30,000.

They want your business to cross sell other products not all your savings..

Hugeass304

Isn't it time that we could withdraw our ISA savings in the form of a cheque that has ISA money plastered all over it. We could then deposit this ISA money, still in its ISA wrapper into another ISA with another institution on the same day.

There would be no need for all this 30 day nonsense

epsilondraconis

Hugeass304 wrote: »

Isn't it time that we could withdraw our ISA savings in the form of a cheque that has ISA money plastered all over it. We could then deposit this ISA money, still in its ISA wrapper into another ISA with another institution on the same day.

There would be no need for all this 30 day nonsense

That sounds far too easy and sensible to me.

Milarky

Hugeass304 wrote: »

Isn't it time that we could withdraw our ISA savings in the form of a cheque that has ISA money plastered all over it. We could then deposit this ISA money, still in its ISA wrapper into another ISA with another institution on the same day.

There would be no need for all this 30 day nonsense

I was thinking this only today - that's how maturing TESSA's operated - you had up to 180 days to redeposit the maturity capital (interest for some reason couldn't be included) But I think the reason that couldn't happen now is it would be a virtual admission that the current system creaks too much more comfort. Better to try and police the '30 days' rule more strictly.

Accepting transfers ... well if that had been written into the rules at the start it would have been more workable because a) the amounts available to transfer in the early years would not have been as large as they are today and b) the increased frequency of transfers generated in those early years would have 'stress tested' ISA providers arrangements - with the result that by today they would all pretty efficient

Other issues:

The requirement that cheques be sent in the post to make transactions traceable is a recipe for problems experience suggests.

Interest should be payable for every day - with no gaps allowed.

If HMRC were to revise the rules to require free BACS transfers for ISAs the other new 'rule' covering interest would be self-enforcing now that same day payments are coming.

bristolleedsfan

I agree with Debbie and Paul Herring. :T

ISA transfers in cost more to administer than new deposits that is apparent, the "long term" best paying ISAs have never tended to accept transfer ins.

The current best paying ISAs ( notice ive omitted the words "long term" ) that allow transfers in are effectively loss leaders hoping to gain other business or keep people on lower rates in 12 Months time.

ISA rates are already poor ( compared with tessas) due to the Government adding kitemarks etc to those that are instant access etc)

The key IMO is not for people to chase every xtra 0.05% and keep switching to the best paying ISAs, but to put their savings in accounts that are consistently high paying.

Fines never get paid to the customer, if an existing ISA provider fails to transfer out within 30 days the customer can complain to them and gain compensation.

Improvements can be made like Providers communicating with each other via electronic means, sadly some providers do enjoy profittering on delays in banking cheques.

Milarky

bristolleedsfan wrote: »

ISA transfers in cost more to administer than new deposits that is apparent, the "long term" best paying ISAs have never tended to accept transfer ins.

Possibly they do - but they make heavy weather of what is a elementary record keeping exercise. Look at all the varied ways institutions interpret 'money laundering' due diligence now - some appear to be copper-plated whilst others appear 'lite' touch (electronic checks) So there must be 'ISA administration' and 'ISAs: Highly Complex - do not enter' administration - according to taste. The true 'cost', in other words, should scarcely come into it.

ISA rates are already poor (compared with tessas) due to the Government adding kitemarks etc to those that are instant access etc)

No. They are 'poor' (compared to comparable taxable accounts - even with unlimited balances) because ISA providers know the interest is being received gross - in other words ISA customers will rationally accept the offer of 'lower' nominal rates. That's not what the government intended - it is simply an inevitable result of having 'tax free' and 'ordinary' accounts as opposed to a portable (tax free) allowance concept.

Oblivion

Hugeass304 wrote: »

Isn't it time that we could withdraw our ISA savings in the form of a cheque that has ISA money plastered all over it. We could then deposit this ISA money, still in its ISA wrapper into another ISA with another institution on the same day.

There would be no need for all this 30 day nonsense

Sounds good to me.