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Banks’ cash Isa advice is poor, says Which? Money

Does your bank know the cash Isa transfer rules?

Cash Isa savings - piggy bank

Too many banks and building societies didn’t offer accurate advice on cash Isa transfers

In an undercover investigation, Which? found that just three out of 104 calls to cash Isa providers resulted in correct answers to all of our four simple questions about cash Isa transfer rules.  

Cash Isa advice: the best and the worst

HSBC answered the fewest cash Isa questions correctly (scoring an overall average of 32% across all four questions), followed by the Royal Bank of Scotland (35%), The Co-operative Bank and First Direct (both with 38%). 

Most advisers (97%) gave conflicting and incorrect information about how much consumers could transfer, and 43% were unaware that you could move money from a cash Isa to a stocks and shares Isa. One HSBC adviser even suggested that the more money people had, the longer a transfer would take. 

Simple Isa questions, muddled answers

Mystery shoppers called 13 of the top cash Isa providers to ask four simple questions, but were greeted with a host of muddled, confused and incorrect answers.  

As cash Isas are tax-free accounts, you must follow certain rules about what you can and cannot do. Get it wrong and you could lose tax relief on your savings interest.

Which? chief executive, Peter Vicary-Smith said: ‘We were genuinely shocked by this Isa investigation. Cash Isa transfer rules aren’t that complicated and cash Isas have been around since 1999 – surely 12 years is long enough to learn the rules? 

‘We last looked at Isa transfers seven years ago and were depressed to see that training for staff in this area doesn’t seem to have improved. Surely banks and building societies have the resources to ensure their frontline staff are properly trained?’

Tips for avoiding cash Isa confusion

Make sure you don’t fall foul of the Isa transfer rules by following these simple tips:

  • Never close your old account and open a new one yourself, as you’ll lose the tax advantage. Instead, ask your new provider for an official Isa transfer form.
  • You can transfer as much or as little as you like of any Isa savings from previous tax years. However, if you want to transfer your current year’s Isa savings, you must transfer the whole lump sum you’ve put by – not just part of it. 
  • You can move your money from a cash Isa to a stocks and shares Isa, but not back again.

There’s more information about Isa transfers, and how Isas work, in the Which? Cash Isas advice guide. You can also compare Isas by visiting our Cash Isas review, which features fixed-rate accounts as well as easy access Isas.

Finally, it’s important to be aware that an Isa transfer should take no longer than 15 working days. If it takes longer than this, complain to your bank – and remember, you can take your complaint to the Financial Ombudsman Service if your provider doesn’t deal with your problem in a satisfactory way.

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