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Banks failing to give right cash Isa advice

Which? investigation highlights poor Isa knowledge

Some of the UK’s biggest banks are failing to give the right advice when it comes to transferring and managing their cash Isas, a new investigation by Which? can reveal.

Which? placed 180 calls to 15 leading banks and building societies to assess the quality of advice given to people who want to transfer their cash Isa savings. 

Shockingly, big names such as HSBC, Yorkshire Bank, Royal Bank of Scotland (RBS), First Direct and Barclays failed to give correct answers to three simple cash Isa questions in more than 50% of the calls we made.

In fact, just 16 of the 180 calls we made gave correct answers to all of the questions we asked. You can see the best and worst banks in the graphic below. 

Have you ever received misleading information about cash Isas from your bank or building society? Join in the discussion about cash Isa transfers on Which? Conversation.

 Cash Isa infographic 

Cash Isa transfer advice falls short

HSBC scored just 33% in our tests. It scored particularly badly on when we asked if there were any rules about how much you can transfer – one provider incorrectly told us that you had to transfer a minimum of £10,000.

Yorkshire Bank scored just 8% when asked the same question. Worryingly, in six out of the 12 calls we made to the bank we were given the incorrect Isa limit, with answers ranging between £5,340 and £5,620 (the correct answer is £5,640 for the 2012/13 tax year). One Yorkshire Bank adviser told us there was no limit at all .

RBS, which finished third from bottom in our tests, told one of our researchers that all we needed to do was ‘just withdraw your funds, close the account down and transfer it over to somebody’ when we asked about transferring our cash Isa. This advice is dangerously wrong – doing so would mean losing the tax-free status that makes saving in an Isa so attractive.

You can read the full report on cash Isa transfers in the April 2013 edition of Which?.

Banks must up their standards, says Which?

Richard Lloyd, executive director at Which? said: ‘Banks and building societies are still falling short when it comes to providing basic information over the phone about cash Isa transfers.

‘Without reliable advice, customers could be put off from moving their money or worse still lose out as a result of misleading information.  We want to see better training for frontline staff as part of the big change that’s needed in banking, so that banks put customers first.’

Five steps to a successful Isa transfer

1) Check whether or not your new provider will allow you to transfer older Isas to it, because not all do.

2) Beware of penalties: your existing provider can’t prevent you from transferring but, if you have a fixed-rate or notice Isa, you might incur charges.

3) Contact your new provider and request a Cash Isa Transfer Authority form. Never close your account and transfer the money yourself, as you will lose the tax benefits.

4) On your Cash Isa Transfer Authority form you will be asked to specify the amount you’d like to transfer. If you’re transferring an Isa from the current tax year, you must move the full amount. But if you’ve built up savings from previous years, it’s up to you how much you move.

5) It shouldn’t take longer than 15 working days to complete the transfer, so complain to your provider if you experience any delays. 

More on this…

  • Best rate cash Isas – find the perfect home for your savings
  • How to switch your Isa – follow our guide when moving your money
  • Call the Which? Money Helpline – if you have a savings problem
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