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  • FIRST POST
    • Matthew2018
    • By Matthew2018 12th Apr 19, 1:45 PM
    • 42Posts
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    Matthew2018
    ISA Transfer Delay
    • #1
    • 12th Apr 19, 1:45 PM
    ISA Transfer Delay 12th Apr 19 at 1:45 PM
    Are the financial organisations profiting from our money by artifically delaying any ISA transfer?

    I am trying to transfer my Cash ISA to a Stocks and Shares ISA.

    According to a statement I received last Saturday the money left my Cash ISA on 3 April and interest was calculated up to that date.

    When I phoned last Monday I found that a cheque had been received by the S&S financial company. As of today Friday 12 April the money is still not in my S&S ISA. That's 10 days and counting (8 working days) where I have not had access to my own money.

    It is not the first time that I have had delays in transfering an ISA.

    The use of cheques to transfer between two financial organisations seems to be used for unnecessary delay. Surely these big financial organisation could use bank transfer.

    This case is transferring from Natwest to IG. Others have been between Santander and Virgin.

    Have any other people had delays in transfering their ISAs.

    Is there anything we, the ordinary punters, can do about this?
Page 1
    • Reed_Richards
    • By Reed_Richards 12th Apr 19, 2:57 PM
    • 327 Posts
    • 178 Thanks
    Reed_Richards
    • #2
    • 12th Apr 19, 2:57 PM
    • #2
    • 12th Apr 19, 2:57 PM
    If you do a cash ISA to cash ISA transfer then interest is often back-dated if there is a delay.
    Reed
    • masonic
    • By masonic 12th Apr 19, 5:30 PM
    • 11,561 Posts
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    masonic
    • #3
    • 12th Apr 19, 5:30 PM
    • #3
    • 12th Apr 19, 5:30 PM
    Are the financial organisations profiting from our money by artifically delaying any ISA transfer?
    Originally posted by Matthew2018
    No, how could it profit the new ISA manager to delay taking money from the old ISA manager? They will be just as eager to get hold of your cash as you are for them to receive it.

    The use of cheques to transfer between two financial organisations seems to be used for unnecessary delay. Surely these big financial organisation could use bank transfer.
    Cheques are used in cases where the ISA paperwork is transferred by post, because it keeps everything together. Several organisations have implemented electronic systems and can do paper-free transfers. S&S ISA providers are slow on the uptake (it's far more common among cash and IF ISA providers)

    This case is transferring from Natwest to IG. Others have been between Santander and Virgin.

    Have any other people had delays in transfering their ISAs.

    Is there anything we, the ordinary punters, can do about this?
    There is a strict time limit of 8 working days on sending the funds for a cash ISA to cash ISA transfer and applying those funds to the new account (see this page), and more relaxed limits on transfers to and from other types of ISA. If you are waiting an unreasonable length of time, say, more than 16 working days, you could have grounds for a complaint.
    • Matthew2018
    • By Matthew2018 12th Apr 19, 7:14 PM
    • 42 Posts
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    Matthew2018
    • #4
    • 12th Apr 19, 7:14 PM
    • #4
    • 12th Apr 19, 7:14 PM
    No, how could it profit the new ISA manager to delay taking money from the old ISA manager? They will be just as eager to get hold of your cash as you are for them to receive it.
    Originally posted by masonic
    Not correct. My money is either still with the old ISA manager or with the new ISA manager. Either way it is not in my account. While it is with the old manager it is earning them interest. If it is with the new ISA manager it is earning them interest. But I cannot use it.

    Cheques are used in cases where the ISA paperwork is transferred by post, because it keeps everything together. Several organisations have implemented electronic systems and can do paper-free transfers. S&S ISA providers are slow on the uptake (it's far more common among cash and IF ISA providers)
    Originally posted by masonic
    There is no reason for them to speed up the process since money stays in the old manager's pending account until moved to the new manager's pending account. Both managers have access to unallocated money by one degree or another until the money gets reallocated to my account.

    There is a strict time limit of 8 working days on sending the funds for a cash ISA to cash ISA transfer and applying those funds to the new account (see this page), and more relaxed limits on transfers to and from other types of ISA. If you are waiting an unreasonable length of time, say, more than 16 working days, you could have grounds for a complaint.
    Originally posted by masonic
    You've got to be kidding me. There is no reason why all paperwork should not be sent electronically right now. I do this all the time. How many times have you sent an attachment in an email. Do you use crytographically secured email - Its easy. Banks must have better secure systems than I have. Definitely electronically is much safer than snail mail.


    Transferring from a cash ISA to any other ISA whether this is S&S or another cash ISA is identical. All you are moving is cash. There is no need to sell any shares. On this basis the limit of eight days has already been broken. In excess of 20 years ago I was regularly transferring paperwork electronically across continents. The banks could do it now but it is not financially benficial for them to do so.

    It may take some time to get to a stage where the money is taken from your old ISA. But at that stage it should a simple electronic transfer to the new account. It can be done in seconds. Eight days may be legal but I cannot believe you or anybody else would feel that this was reasonable. I don't.
    • masonic
    • By masonic 12th Apr 19, 8:22 PM
    • 11,561 Posts
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    masonic
    • #5
    • 12th Apr 19, 8:22 PM
    • #5
    • 12th Apr 19, 8:22 PM
    Not correct. My money is either still with the old ISA manager or with the new ISA manager. Either way it is not in my account. While it is with the old manager it is earning them interest. If it is with the new ISA manager it is earning them interest. But I cannot use it.

    There is no reason for them to speed up the process since money stays in the old manager's pending account until moved to the new manager's pending account. Both managers have access to unallocated money by one degree or another until the money gets reallocated to my account.
    Originally posted by Matthew2018
    So the money is in their "pending account"? Is that an account where the money needs to be available and therefore can't really be used for anything? Unless you are transferring a 6 figure sum, the postage and stationary costs alone are likely to outweigh any money Natwest will make by falling back to the slower paper transfer process.

    There are two quite obvious reasons for the process not being any faster. The first is that you are dealing with two companies with two different sets of systems, among a sea of providers all with their own systems. In this case it is IG whose systems are not capable of accepting a fully electronic ISA transfer because Natwest does support electronic transfers would only fall back to the slower process if they had to.

    You've got to be kidding me. There is no reason why all paperwork should not be sent electronically right now. I do this all the time. How many times have you sent an attachment in an email. Do you use crytographically secured email - Its easy. Banks must have better secure systems than I have. Definitely electronically is much safer than snail mail.
    I'm not kidding you. I linked to the HMRC website, which describes the processes and timescales.

    I do have an encrypted email account, but I have nobody to send email to who accepts encrypted email messages, so the situation is rather similar to this one. Financial firms will not send sensitive information by email and other forms of secure communication are not sufficiently widely adopted. Rather like the systems used to electronically transfer ISAs are not widely adopted.

    Transferring from a cash ISA to any other ISA whether this is S&S or another cash ISA is identical. All you are moving is cash. There is no need to sell any shares. On this basis the limit of eight days has already been broken. In excess of 20 years ago I was regularly transferring paperwork electronically across continents. The banks could do it now but it is not financially benficial for them to do so.
    No it is not. S&S ISA managers do not deal only in cash transfers, in fact in specie transfers of stock and funds are quite common. So their systems have to be different than those of cash ISA managers. There is less incentive to adopt systems that would only be used for a fraction of the transfers they process. Cash ISA to S&S ISA transfers are also relatively rare, and the more common S&S iSA to S&S ISA transfers are less likely to be able to use an electronic transfer system because fewer providers support such a system.

    It may take some time to get to a stage where the money is taken from your old ISA. But at that stage it should a simple electronic transfer to the new account. It can be done in seconds. Eight days may be legal but I cannot believe you or anybody else would feel that this was reasonable. I don't.
    Then petition IG to invest in their systems (Natwest support electronic transfers). They certainly ought to be able to afford to with all the money they fleece from punters upon which they foist CFDs and forex trading accounts.
    Last edited by masonic; 12-04-2019 at 8:41 PM.
    • Matthew2018
    • By Matthew2018 13th Apr 19, 12:06 AM
    • 42 Posts
    • 9 Thanks
    Matthew2018
    • #6
    • 13th Apr 19, 12:06 AM
    • #6
    • 13th Apr 19, 12:06 AM
    So the money is in their "pending account"? Is that an account where the money needs to be available and therefore can't really be used for anything?
    Originally posted by masonic

    No this is the bank account where millions of pounds of money, that will not be needed until tomorrow, is put on deposit at overnight rates. This is the account where money is held which will not be transferred until the cheque, moving through the postal system and the recipient's system, is finally cleared in several day's time. Banks have departments whose only task is to determine how much money is needed for current expenditure (by the day or possibly by the hour) the remaining money not immediately required is put on deposit. My 2575 plus 1000 other people who are also transfering money at the same time could add up to many millions. If you as a bank could extend this transfer time by just a day, just think of interest you could make by holding the money yourself. Now consider that every day a further 1000 customers want to transfer money. Effectively, you have millions of pounds on deposit for a whole year. By paying by cheque, the banks do not just extend the transfer time by a single day but by several days.



    the postage and stationary costs alone are likely to outweigh any money Natwest will make by falling back to the slower paper transfer process.
    Originally posted by masonic
    In my experience paper based systems of any kind are not just expensive, but are very expensive when compared with fully electronic systems. Digital systems can direct processes to the correct person instantly and they don't lose pieces of paper. Cheque handling systems requiring printing and manual processes to secure the cheques and get them signed are even more expensive. If banks are still using these systems then it is because they offer an advantage over digital methods. That advantage is interest.


    I'm not kidding you. I linked to the HMRC website, which describes the processes and timescales.
    Originally posted by masonic
    HMRC instruction: Don't do what I do -do what I say. Many years ago, when I used to pay VAT by cheque, the money came out of my bank account on the day that HMRC received the cheque.
    • masonic
    • By masonic 13th Apr 19, 6:28 AM
    • 11,561 Posts
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    masonic
    • #7
    • 13th Apr 19, 6:28 AM
    • #7
    • 13th Apr 19, 6:28 AM
    No this is the bank account where millions of pounds of money, that will not be needed until tomorrow, is put on deposit at overnight rates. This is the account where money is held which will not be transferred until the cheque, moving through the postal system and the recipient's system, is finally cleared in several day's time. Banks have departments whose only task is to determine how much money is needed for current expenditure (by the day or possibly by the hour) the remaining money not immediately required is put on deposit. My 2575 plus 1000 other people who are also transfering money at the same time could add up to many millions. If you as a bank could extend this transfer time by just a day, just think of interest you could make by holding the money yourself. Now consider that every day a further 1000 customers want to transfer money. Effectively, you have millions of pounds on deposit for a whole year. By paying by cheque, the banks do not just extend the transfer time by a single day but by several days.
    Originally posted by Matthew2018
    Overnight LIBOR rates are about 0.66%, and 1 week LIBOR rates are about 0.7%. Your 2575, even if it could be lent with a maturity of a week, which is unlikely, would earn Natwest 32p. Whereas they would need to spend 44p for a second class piece of franked mail (they actually use first class mail, costing them about 60p), plus the cost of an A5 envelope. This is for the initial application to transfer. They would then need to send another piece of mail containing the cheque and ISA paperwork for your account, costing them a great deal more than they would earn in interest through inter-bank lending.

    By way of example, lets assume there are 1000 paper transfers to perform per week on ISAs with an average balance of 5000. That's 5,000,000 on deposit for 1 week earning 670 in interest, but the transfer costs total about 3 per customer, so 3,000. The net loss to the bank would be 2,330 per week.

    You mention 1000s of customers, but Natwest states that the majority of transfers it sends (these will primarily transfers with other major banks, rather than gambling company with a sideline in stockbroking) are electronic.

    But you understand the high costs involved in paper systems because you go on to write....

    In my experience paper based systems of any kind are not just expensive, but are very expensive when compared with fully electronic systems. Digital systems can direct processes to the correct person instantly and they don't lose pieces of paper. Cheque handling systems requiring printing and manual processes to secure the cheques and get them signed are even more expensive.
    No wonder Natwest has invested in the digital infrastructure to carry out electronic transfers. It's just a shame IG has not.

    If banks are still using these systems then it is because they offer an advantage over digital methods. That advantage is interest.
    Well consider that myth well and truly debunked, for these reasons:
    1. Natwest is the one who is able to earn a few pennies in interest per thousand pounds transferred using the paper system, and this is considerably less than their costs
    2. Natwest does support electronic transfers and only falls back to paper when dealing with firms that can't cope with electronic. It is IG who can't do electronic transfers, not Natwest, and IG has nothing to gain from delaying your transfer to them.
    Last edited by masonic; 13-04-2019 at 6:56 AM.
    • Matthew2018
    • By Matthew2018 13th Apr 19, 6:58 PM
    • 42 Posts
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    Matthew2018
    • #8
    • 13th Apr 19, 6:58 PM
    • #8
    • 13th Apr 19, 6:58 PM
    Well consider that myth well and truly debunked, for these reasons:
    1. Natwest is the one who is able to earn a few pennies in interest per thousand pounds transferred using the paper system, and this is considerably less than their costs
    2. Natwest does support electronic transfers and only falls back to paper when dealing with firms that can't cope with electronic. It is IG who can't do electronic transfers, not Natwest, and IG has nothing to gain from delaying your transfer to them.
    Originally posted by masonic

    You have a unique way of calculating costs. When I am calculating costs I always have to provide the costs for the new system compared with costs for alternatives so that the extent of cost savings can be established. Without fully itemised cost savings no project will get the go ahead, especially in banks, I learned to my cost.



    In this particular case you would need control systems for handling the printing and issue of cheques, for getting them signed, noting when the letter including the cheque was posted. You would need further systems for reconciling cheque payments. The cost of these will dwarf the cost of the envelope and stamp. Expensive indeed.


    However, these systems are in addition to the sytems they already use for digital payments. Fully digital systems will always beat the costs of systems which include some degree of manual control, such as cheque handling. They will beat them to a large degree.



    In my opinionion manually posting a cheque will always be more expensive than other methods. If you think otherwise we must agree to differ.
    • masonic
    • By masonic 14th Apr 19, 6:43 AM
    • 11,561 Posts
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    masonic
    • #9
    • 14th Apr 19, 6:43 AM
    • #9
    • 14th Apr 19, 6:43 AM
    You have a unique way of calculating costs. When I am calculating costs I always have to provide the costs for the new system compared with costs for alternatives so that the extent of cost savings can be established. Without fully itemised cost savings no project will get the go ahead, especially in banks, I learned to my cost.

    In this particular case you would need control systems for handling the printing and issue of cheques, for getting them signed, noting when the letter including the cheque was posted. You would need further systems for reconciling cheque payments. The cost of these will dwarf the cost of the envelope and stamp. Expensive indeed.

    However, these systems are in addition to the sytems they already use for digital payments. Fully digital systems will always beat the costs of systems which include some degree of manual control, such as cheque handling. They will beat them to a large degree.

    In my opinionion manually posting a cheque will always be more expensive than other methods. If you think otherwise we must agree to differ.
    Originally posted by Matthew2018
    I am in complete agreement with you that a paper system and sending a cheque is more expensive than using an electronic system that already exists (in the case of Natwest).

    I picked out just a couple of known cost items (postage and stationary) in order to demonstrate even these costs come to more than the interest that could be generated on your capital during the delay a paper system would introduce. I agree with you that the other costs associated with a paper transfer would also be more expensive than electronic, to a large degree. As such, my back of the envelope calculations above should be treated as a significant underestimate of the true net loss Natwest incurs when the receiving provider does not support electronic transfers and Natwest must therefore fall back to paper.

    So, in summary the returns Natwest is able to generate on cash held pending a paper transfer are dwarfed by the extra costs associated with the paper transfer, and it does not profit either provider to use the paper system for your transfer - a point that you previously disputed, so I'm glad we are now in agreement.
    Last edited by masonic; 14-04-2019 at 7:17 AM.
    • colsten
    • By colsten 14th Apr 19, 8:30 AM
    • 10,172 Posts
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    colsten
    Fully digital systems will always beat the costs of systems which include some degree of manual control, such as cheque handling.
    Originally posted by Matthew2018
    Eh? Unless there's economies of scale, it will be nigh on impossible to justify the cost of fully digital systems over manual handling.
    • Matthew2018
    • By Matthew2018 14th Apr 19, 2:03 PM
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    Matthew2018
    Eh? Unless there's economies of scale, it will be nigh on impossible to justify the cost of fully digital systems over manual handling.
    Originally posted by colsten

    Well bang goes my vast experience of business systems development and information architecture. You must write a book on your methodology.
    Last edited by Matthew2018; 14-04-2019 at 2:04 PM. Reason: spelling
    • masonic
    • By masonic 14th Apr 19, 3:25 PM
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    masonic
    Well bang goes my vast experience of business systems development and information architecture. You must write a book on your methodology.
    Originally posted by Matthew2018
    To borrow some verbiage quoted at me a while back, do you have experience that would allow you to estimate the costs and timeframe associated with these changes being specified, approved by management, a project management team assembled, scheduled, designed, programmed, documented, put through quality control, merged with existing systems and documented, tested and the results documented, audited and the results documented, planned for release, support staff trained on the new functionality and finally approved for release with all of these stages being monitored not just by internal auditors and the security assurance team but by external auditors?

    I mention as it would be helpful to have this information in mind if you decide to have a conversation with IG about why they haven't implemented such a system yet when by your estimation it will save them money.
    Last edited by masonic; 14-04-2019 at 3:28 PM.
    • Matthew2018
    • By Matthew2018 14th Apr 19, 5:33 PM
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    Matthew2018
    To borrow some verbiage quoted at me a while back, do you have experience that would allow you to estimate the costs and timeframe associated with these changes being specified, approved by management, a project management team assembled, scheduled, designed, programmed, documented, put through quality control, merged with existing systems and documented, tested and the results documented, audited and the results documented, planned for release, support staff trained on the new functionality and finally approved for release with all of these stages being monitored not just by internal auditors and the security assurance team but by external auditors

    I mention as it would be helpful to have this information in mind if you decide to have a conversation with IG about why they haven't implemented such a system yet when by your estimation it will save them money.
    Originally posted by masonic

    Yes. Several decades including banking.

    That's why I know that if they (Natwest and IG) have decided to go for a manual approach there is a reason for for it. I would not want to be a manager who said "we are staying with an inadequate and very expensive manual system because we didn't get round to changing it". That response would be career limiting especially when there is an alternative.

    By your account the alternative system with direct credit is already in existence at Natwest. All they have to do, if IG have not already sent the details, is ring them up and ask for the bank account to send the money to. The reference of my account would already be with Natwest because it was sent with the original request to transfer. No paperwork would need to go back from Natwest to IG. A simple e-mail to say money transferred would work.This would have the advantage that it uses all fast digital systems and none of the existing expensive, manual systems would be needed.

    You may be correct that Natwest is using outdated manual systems because it can't work out how to use their own digital systems. If so that's incompetance and I'm glad I'm getting out. I doubt it though.

    To my mind this is deliberate because there is an advantage of 10 or so days when the money is in is not in my account.



    Which is it?
    • masonic
    • By masonic 14th Apr 19, 6:07 PM
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    masonic
    By your account the alternative system with direct credit is already in existence at Natwest. All they have to do, if IG have not already sent the details, is ring them up and ask for the bank account to send the money to. The reference of my account would already be with Natwest because it was sent with the original request to transfer. No paperwork would need to go back from Natwest to IG. A simple e-mail to say money transferred would work.This would have the advantage that it uses all fast digital systems and none of the existing expensive, manual systems would be needed.
    Originally posted by Matthew2018
    Yes, Natwest definitely do have electronic transfers, and I've experienced an electronic transfer first hand. But to be able to use this system, the other ISA manager must have the systems in place to accept an electronic ISA transfer and must agree to receive the ISA paperwork and funds electronically. This process of agreeing how to process the transfer is set out by HMRC and requires Natwest to do a paper transfer if IG requires this.

    You may be correct that Natwest is using outdated manual systems because it can't work out how to use their own digital systems. If so that's incompetance and I'm glad I'm getting out. I doubt it though.
    I've stated this at least a few times, and I think I have been very clear, but let me try one more time in the hope you will understand:

    The only conceivable reason Natwest would not use its electronic transfer system is if IG was incapable of accepting an ISA transfer electronically. Natwest has been using their digital system for years and states the vast majority of transfers are processed in this way (except, evidenly, when they bump into luddites like IG).

    To my mind this is deliberate because there is an advantage of 10 or so days when the money is in is not in my account.
    We've already debunked this myth in post #7. Remember the 32p of interest they would receive per week delay on your 2575 balance? Remember agreeing that the difference in cost for the paper transfer would be far higher than the postage and stationary alone which would put the cost in pounds rather than pence? While I don't like to give banks any credit I don't think they are due, even I have to credit Natwest with the sense not to earn extra pennies by spending extra pounds, especially with a task that will take more work and be less familiar to their staff.

    Which is it?
    Without any doubt, IG is using outdated manual systems. Probably because they have decided that the cost of developing electronic systems outweighs the benefits for them.

    Armed with your several decades experience, including in banking, you might be well placed to convince them of the error in their ways, or alternatively they might be able to explain to you why they disagree with your assessment.
    Last edited by masonic; 14-04-2019 at 6:26 PM.
    • bowlhead99
    • By bowlhead99 14th Apr 19, 6:47 PM
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    bowlhead99
    ;Fully digital systems will always beat the costs of systems which include some degree of manual control, such as cheque handling
    by Matthew2018
    Eh? Unless there's economies of scale, it will be nigh on impossible to justify the cost of fully digital systems over manual handling.
    by colsten
    Well bang goes my vast experience of business systems development and information architecture. You must write a book on your methodology.
    Originally posted by Matthew2018
    In your experience Matthew:

    - if a firm already has a functioning system of processes and procedures in place which deal with manual receipt of cheques, physical paperwork, bank account credits etc, in relation to a transfer from any of the whole range of ISA providers (there are over 500 of them from Aberdeen to Zopa), exactly how much will it cost to implement a new electronic system of data exchange to interface with the systems of each of those sending providers?

    In broad terms, is it
    (a) it costs a large amount of money;
    (b) it costs no money at all;
    (c) we can tell the CEO that the cost is negative, because it's hopefully a cost saving eventually after we finance the project and wait around for a long enough payback period

    My contention would be option (a) - a new and fully digital system would cost a non-zero amount of money to implement. You might demonstrate that once up and running it would be cheaper per item processed, but there is a huge implementation cost to get there, and the money to buy the first system has already been spent. I could replace my XF with a Tesla and have a lower petrol cost per mile, but if I factor in depreciation on the new car that's a hell of a lot of *extra* cost to replace something which already works adequately. The payback period is long, especially if I'm not doing many miles per year.

    Taking IG Securities as your receiving ISA provider, there are only 5-600 other ISA managers who might send them investor cash from time to time. But the implementation would not be complete (allowing the former paper-based system of manual communication and reconciliation to be discarded) until the last of those ISA providers is fully electronic.

    Maybe the most heavily- venture-capital backed new fintech disruptor will aim to go fully electronic from day one; but looking down the alphabetic list of people from whom they'll receive transfers, before we get to the brands you've heard of - Aberdeen Asset Management and Aegon and AJ Bell and Aldermore and Aviva etc, you get to "6 Towns Credit Union Limited, of West Bromwich" - who I'm sure are quite respectable but do not sound like they have billions on hand from venture capitalists with which to build their interface. The firms will have to cater for the 'lowest common denominator' when rolling out processes and procedures.

    To each of those ISA providers who might be sending stuff (money, securities, client data) to our transferee ISA management business, will 'going fully electronic' mean sending an electronically signed document by encrypted email as you suggest, or uploading the document to a sftp site or data portal or some other method of transmission? And will the method and format of the document being sent be 100% consistent between everyone across the industry providing and processing the information - clearly an encrypted version of a signed scanned PDF is different to an encrypted version of an xml file written to a particular schema even if it provides the same basic info, and would be handled differently by the recipient.

    If there are over 550 registered ISA managers, there are over 150,000 potential combinations of two different managers exchanging information between themselves, but some of those exchanges might never actually be needed and may be wasted effort to establish. So hopefully a collaborative 'one size fits all' solution can be engaged at industry level, to stop the occasional customer raging about how nothing should be done on paper by a human in this day and age. Except the customers don't all rage, they often suck it up, and individual businesses seeking competitive advantage in the financial services arena do not always want to share protocols and operating methods, nor agree to spend 000s per day on a team of consultants to implement a system when they already have a system.

    It would be great for those 150000 handshakes to happen electronically and all be agreed on the best fully digital method. However, some will see that there could be a manual process as a backstop. And if the process for manual intervention has to be in place anyway (you hope you don't need it but don't want to turn a customer away just because his former ISA manager is having difficulties), you are still going to pay the salary of the person doing the manual checks and balances, so the 'nice to have' electronic system is going to be an incremental cost on top, no?

    With economies of scale, you have more ability to reduce costs through implementing a clever system. If NatWest or HL can do a transfer electronically for 20p instead of 70p, that's half a quid saved and they only need to process ten million ISA transfers to be able to afford a million pounds of consulting and four million pounds of hardware, software and training. The payback period might only be a matter of a few years for them. Meanwhile, it seems like it would not be worth it for the lower volume business at 6 Towns Credit Union.

    So 6 Towns Credit Union will continue to send paperwork by post. And HL and Natwest will need to employ staff to open the letters from such firms, and bank the cheques, and have a managmeent overlay to oversee the process. If they still have the people and process and overhead from the 'old school' way of doing things, because 6T are sending them snail mail, or haven't automatically tagged their cash payment in the banking system with the right secret codes which allow auto matching and reconciliation... then maybe the saving is not 50p a transfer but only 25p a transfer, doubling the payback period of the project.

    Continuing the car analogy if I change the Jag for a Tesla I would be diverting a year's post tax salary to getting the new beast, but still need to keep my old one taxed and insured so I can occasionally drive London to Edinburgh without stopping for a several-hours charge along the way.


    [disclaimer - 6 Towns may well be fully electronic for all I know. They are just the first name on the HMRC list of managers]
    Last edited by bowlhead99; 14-04-2019 at 7:12 PM.
    • Matthew2018
    • By Matthew2018 15th Apr 19, 11:57 PM
    • 42 Posts
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    Matthew2018
    [QUOTE=bowlhead99;75704633
    In broad terms, is it
    (a) it costs a large amount of money;
    (b) it costs no money at all;
    (c) we can tell the CEO that the cost is negative, because it's hopefully a cost saving eventually after we finance the project and wait around for a long enough payback period
    [/QUOTE]


    Any change will cost money but see below for a negligible cost solution. This approach could lead to significant operational cost savings both to old and new ISA managers. However I can't tell unless I actually do some proper business analysis.


    It's sad that things probably won't change, or more accurately things cannot change. I've lost track of how many new projects I've been responsible for which had trouble getting past the design stage because old legacy systems couldn't be adapted easily to incorporate new interfaces required.

    Looked at with a business process hat on there are very few business processes needed to transfer an ISA. From the point at which money has been taken from the old ISA account, the old ISA manager needs to send two things to the new manager. Documentation and the money.

    With documentation there are so many methods of sending this from one place to another. They each have their advantages and disadvantages. However the only one that banks seem to be able to use involves physically sending pieces of paper with words on. Paper needs a multitude of other processes both for the sender and the recipient. Filing the paper, scanning, Retyping into new system for a start.

    It is worth noting that the construction of the first transcontinental telegraph in America in 1861 rendered Pony Express redundant. Bank messengers in London were no longer required in the 1960s. Here we are nearly 160 years after telegraph started, in 2019, unable to use any form of technology to transfer information. Try looking up EDI.

    Here's my two penneth for a very simple approach. Use PDF files and send the documentation electronically. (Note: on my computer PDF printing can be selected as printing to another printer.) PDF files can be secured so that only the correct recipient can open them. Use telephone to contact the other party to communicate passwords or other security codes. No extra systems development is required.

    For money transfer well what can I say. If a bank can send money round the world instantly at the push of a button it should probably be able to handle this!

    If any bank needs to contact me to pay me my fee for this advice leave a response on this forum and I'll get back to you. I prefer bank transfer but I will accept cheque. There's a hitching rail for your horse if necessary but please let me know in advance so that I can move my car.
    • colsten
    • By colsten 16th Apr 19, 7:22 AM
    • 10,172 Posts
    • 9,334 Thanks
    colsten

    If any bank needs to contact me to pay me my fee for this advice leave a response on this forum and I'll get back to you.
    Originally posted by Matthew2018
    I am sure they'll all be queuing up. Well done.
    • bowlhead99
    • By bowlhead99 16th Apr 19, 12:28 PM
    • 8,611 Posts
    • 15,750 Thanks
    bowlhead99
    Here's my two penneth for a very simple approach. Use PDF files and send the documentation electronically. (Note: on my computer PDF printing can be selected as printing to another printer.) PDF files can be secured so that only the correct recipient can open them. Use telephone to contact the other party to communicate passwords or other security codes. No extra systems development is required.
    Originally posted by Matthew2018
    So in the new system the person at the transferring bank has to arrange a time to speak to the relevant staff at the recipient bank to communicate security information to be manually keyed into a system, so both banks will need to arrange to have human staff available to devote their time to communicating by telephone on that transaction at the exact same time, rather than the post office solution where someone drops off the item at their convenience and someone else picks it up at their convenience.

    And we're using portable document format for the file spec (primarily designed for portability across systems rather than for feeding a database), and because it's a simple print and there is no system development being done by the sending bank, it will just have been printed in accordance with the sending bank's standard, so the ending data is not really any more suitable to directly interface into the recipient system then if it had been received in paper and scanned with OCR (still in the sending bank format, rather than in the format the recipient bank wants).

    So basically you have compressed the timescale for a document being received (versus post) but have introduced a requirement for concurrent staff availablity within the two businesses for the phone conversation (which adversely impacts the timescale), and as there was no actual system development, many of the inefficiencies in the 150000 pairs of financial institution relationships still exist.

    As "Fully digital systems will always beat the costs of systems which include some degree of manual control", your proposition of not digitising it, doesn't really seem to fit your own brief

    You acknowledge that "more accurately, things cannot change" and that in your experience things don't get past the design stage as they are complex and existing paid-for systems may not interface well, and that must be especially true when you are trying to digitise transactions between multiple parties. Seems to be a glimmer of recognition that how it was first explained to you might be a reasonable explanation, rather than your original attitude of "you've got to be kidding me!"
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