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Savers are delayed in transferring their Isa cash accounts for a better rate.
Poor record keeping and shoddy customer service mean that some transfers take more than a month to complete.
That’s despite industry rules – set by HM Revenue & Customs (HMRC) – that state transfers must be made within 15 working days. Complaints to the Financial Affairs Ombudsman about money ISAs are also increasing.
Delays: Some Isa cash transfers take more than a month to complete despite industry rules stating they must be executed within 15 business days
In the three months to the end of September 2022, it received 230 complaints, 46 percent more than the 157 in the previous quarter.
Figures for the three months to December are not yet available, but the Ombudsman has confirmed to Money Mail that there has been another rise in complaints.
The big advantage of cash Isas over regular bills is that all of your interest is tax-free. You have the right to transfer your Isa money between providers at any time.
These transfers, which typically involve more paperwork than other accounts due to additional regulations, take longer to complete than switching a regular account.
In addition to the 15-day rules, a voluntary agreement between industry associations UK Finance for the banks, the Building Societies Association and The Investing and Saving Alliance aims to complete 85 per cent of requests within seven working days.
One month to switch Isa deals
It took a Money Mail reader from Ripon, N. Yorks, who does not wish to be named, more than a month to transfer his money Isa from an easily accessible account, with Goldman Sachs paying Marcus 2.25 percent to a two-year-old Charter Savings Bank’s fixed-rate deal pays nearly double at 4.38 percent.
He asked for the transfer on November 16. Marcus finally sent the check on December 7 – 21 days after the request. His account with Charter was opened 12 days later.
A spokesperson for Marcus said: “We are sorry for the delays in this handover, which was also affected by the postal strikes.”
Paul Attersoll of Weston-super-Mare, Somerset, was in danger of losing the tax relief on his money because of a clumsy administration by Santander.
He filled out the form to transfer his past due fixed rate cash Isa at Nationwide to Santander’s one-year fixed rate Isa at 3.7 percent on Oct. 24.
Two days later, Nationwide offered him a better rate of 4 percent, so he decided to stick with it.
He canceled the transfer with Santander, but it went through on November 7, even though the cancellation request had appeared in his system.
He called to report the error. Four days later he received a check from Santander for the money in his Isa. It wasn’t until he mailed the check to Nationwide that his new Isa was opened.
A spokesman for Santander said: ‘We made a number of mistakes in the handling of Mr Attersoll’s application and subsequent closure. To apologise, we have offered a gesture of goodwill of £200 on top of the £50 we gave him in November.”
The big advantage of cash Isas over regular bills is that all of your interest is tax-free. You have the right to transfer your Isa money between providers at any time
Others have had problems with Virgin Money.
Among them is Claire Atkinson of Sheffield, South Yorkshire, who on Oct. 24 asked to convert her expiring fixed-rate Isa into a two-year, 4.25 per cent fixed deal.
At the same time, she wanted to transfer money that was on her Virgin Easy Access Isa and only paid 0.25 percent to the new account.
But all her money remained in the badly paid account until early December.
A Virgin Money spokesperson said: ‘Unfortunately, due to the popularity of our ISAs, some applications have taken a little longer in recent months. We’re sorry for the delays.’
Two important rules to follow
There are rules you must follow to move your Isa money. The first is: don’t do it yourself. You may lose the tax benefits on your money.
Instead, choose a new provider and fill out their Isa switch form. Here you enter the details of your existing Isa, your name, address and how much you want to transfer.
The new provider will send your transfer form to your current provider and they will arrange the switch among themselves.
HMRC rules say that if you transfer money you put into an Isa in cash during the current tax year, you must transfer it all along with the interest.
You can transfer money that you have deposited in previous years in whole or in part.
If you arrange to exchange your fixed rate Isa just before the end of the term, make sure that you indicate that you do not want the transfer to take place until after the end date.
If not, you pay the early withdrawal fee, often the equivalent of 90 days interest on a one-year fixed-rate Isa — with higher penalties for longer-term ISAs.
Your money is normally moved electronically between the banks and building societies, but some smaller providers still use checks through the mail.
sy.morris@dailymail.co.uk
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