How long does an ISA transfer take? Readers report months of delays

Savers trying to move their money between different types of Isa have been left in limbo due to lengthy transfer delays, This is Money has found.

A reader told This is Money that the transfer of her savings from Virgin Money stock and shares of Isa to a Virgin Money cash Isa had to be completed with a check that got lost between departments, leading to a delay of six weeks – and they are still coming.

Another says she’s been waiting since February 2023 for her savings to be transferred from a now-defunct Virgin Money help-to-buy Isa to a Barclays Cash Isa, meaning she’s lost nearly six months’ worth of interest.

Both wonder why a seemingly simple transfer of hard-earned savings is taking so long – and whether interest will be paid retroactively.

We’ve looked at how long an Isa transfer should take, why the process might be delayed – and whether moving from stock to cash is a good move right now.

says Helen Kirrane of This is Money: I’ll look at internal money transfer with Virgin Money first.

You would think that transferring an amount of money from one branch of a bank to another would be simple and fast enough, but that doesn’t seem to be the case here.

More than 90 percent of transfers between a stock Isa and a cash Isa are electronic and made through a BACS payment, so banks asking for a check are unusual in this sense.

I asked three money experts how long someone should wait for an internal savings account transfer, and if there’s anything they can do to speed it up.

How easy is it to move money within one bank?

Katja Stout, personal finance expert at Quilter answers: This strongly depends on the provider.

Unfortunately, many banks and building societies are still working with old technology systems, so are not as adept as some new players or investment platforms at transferring business completely online – also known as straight-through processing.

Many of us no longer have a checkbook, while some younger customers don’t even know what that is. So it is important to check how to transfer your funds between accounts before signing up. As in this case, mail can be lost quite easily, so a lack of digital services should be an alarm signal before an account is opened.

Laura Suter, head of personal finance at AJ Bell replies: How the money is sent depends on the terms and conditions of the receiving provider. Indeed, some banks still require checks. It entirely depends on how Isa’s money provider works.

A spokesperson for Virgin Money replies: Currently, the majority of transfers of our shares and shares of Isas are processed by default as a check and posted to the new provider.

In the near future, as we make improvements to our offering of investment and retirement services, money transfers will be sent electronically where possible. In cases where it has not been possible to complete the transfer electronically, a check will still be sent.”

What about transfers between banks?

Helen Kirrane from This is Money replies: When it comes to transfers between Isa providers, it depends on the case and the systems used by the banks and can vary.

Cash Isa transfers are typically faster and take no longer than 15 business days. For other types of Isa, including stocks, it should not exceed 30 calendar days.

Obstacles to a quick transfer in time are, for example, if share classes need to be converted, which is the case with exclusive shares.

A spokesperson for Barclays replies: We recognize that there have been delays in setting up our client’s Isa, and we apologize for our failure on this occasion to provide the high level of service that our clients can expect.

“We can confirm that the transfer has now successfully restarted. We will ensure that our customer is not penalized as a result of the delay and have offered additional compensation for the inconvenience caused.

Will the interest be retroactive if there are delays in the transfer?

Helen Kirrane from This is Money replies: Whether or not interest is paid retroactively as a result of a delay in transferring funds is at the discretion of the provider.

If a transfer between Isas is delayed due to a reason not the customer’s fault, it is only right for the provider to investigate the situation and respond to the customer accordingly.

In the case of both readers, they missed out on the interest that their savings would have earned had their savings been quickly transferred to the new accounts, so it’s only fair that the interest should be paid retroactively.

How long should it take?

The short answer is that it depends on the provider you work with when moving from an equity Isa to a cash Isa.

Myron Jobson, senior personal finance analyst at Interactive Investor replies: We aim to complete within seven calendar days (when transferring money) and for transfers we aim to complete within three to four weeks, but this is dependent on the counterparty’s involvement.

Laura Suter replies: Transfer time normally totals six to seven calendar days. The main factor determining time is the need for the client to dilute their investments. Some funds have a lead time of four days for this.

Katja Stout replies: This is highly dependent on the investments held. If they are standard funds or stocks, it should only take a few days to sell them and get the money available.

If more complex investments are held within the Isa, this may require more time. Once the assets are sold, the transfer can take place, depending on the systems used.

Transferring accounts internally at a provider shouldn’t be a difficult process, but especially if ISAS is involved, more information may be required to verify tax status and such.

Is it a good time to trade investments for cash?

Katja Stout replies: With cash savings rates currently so high, it may seem tempting to stop investing and instead put a guaranteed 4 to 5 percent into a savings account each year.

However, inflation remains high and as a result savers need to take this into account to fully understand what their return on a fixed cash rate would be. Inflation is currently at 6.8 percent, so even a 5 percent cash rate would mean a net loss of 1.8 percentage points.

Investing, on the other hand, offers savers the best potential to beat inflation over the long term, especially as markets continue to recover from a difficult 2022.

However, the investment horizon should be set at five years or more, so if you need the money sooner, it may be better to put it in a high-yield savings account.

Laura Suter replies: We are a cash loving nation, and with interest rates on cash rising, we are finally being rewarded for that love affair.

Interest rates have risen significantly, with the most accessible cash accounts going from 0.5 percent two years ago to 5 percent today, according to Moneyfacts.

That means people with a substantial pot of money are getting hundreds of pounds a year in interest on their money, instead of the handful of pounds they used to get.

But you’ll only benefit if you’ve transferred your money to a top-paying account, as banks are notoriously bad at passing on the higher rates just like that.

If you can’t get close to 5 percent of your easily accessible savings, transfer your money today. Fixed rate accounts pay more, so if you know you won’t need the money for the next two years, you can tie it up for a bigger return.

However, there are two big factors that you cannot ignore. The first is inflation, which is still well above the cash rate and means your money is losing purchasing power in real terms.

The second is the longer term view. Research into long-term stock market returns shows that they average around 5 percent after inflation, so around 7 percent at normal inflation rates. That’s much higher than what you get in cash, especially over longer periods of time.

Myron Jobson replies: When choosing between an equity Isa and a cash Isa, it is important to consider your objectives and risk tolerance.

If you think long term and can tolerate market swings, shares of Isa offer the potential for higher returns. On the other hand, if you prefer stability and a guaranteed return, a cash Isa may be more suitable, especially if your investment horizon is shorter.

While past performance is not an indicator of future results, looking back at history shows that you have a much better chance of earning returns that beat inflation than the interest you get on cash.