Cash ISA transfers to speed up

| June 29, 2010 | 0 Comments

Following an investigation into Individual Savings Accounts (ISAs), savers with a cash ISA should find it quicker to switch their money to a different provider.

The 90-day investigation, conducted by the Office of Fair Trading (OFT), came after Consumer Focus warned that cash ISAs are depriving savers of £3 billion in interest each year.

The consumer group said savers are missing out on billions of pounds of interest, primarily because it is difficult to transfer to another provider due to “poor and bureaucratic processes”.

However, savers should not lose any interest when switching their cash to a different provider, the Office of Fair Trading (OFT) has said, and a “fairer deal” will be given to customers.

Industry guidelines say the switching process should not take more than 23 working days.

However, the OFT has agreed with the banking industry that this deadline should now fall to 15 days.

One of the reasons the switching process is so lengthy is because the old provider sends a cheque and details to the new one via second-class post.

The report has been welcomed by the British Bankers’ Association who said the agreed measures were “a clear example of how the industry has been listening to the concerns of customers and consumer organisations”.

ISAs were launched a decade ago by Gordon Brown, who was Chancellor at the time, and were introduced to encourage Brits to save without having to pay money to the tax man.

The accounts have been growing in popularity over the last decade and according to a recent report by the Halifax, the number of accounts opened in the nine years to March 2009 surged by 53%.

Furthermore, in the last 18 months or so, many have turned to ISAs in the current low interest rate environment and last October, the total ISA allowance for people born on or before 5 April 1960 increased from £7,200 to £10,200.

For everyone else, the limit rose in April.

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