93% of ISAs transferred within 15 days
Many savers will be planning to transfer their cash Isa, to take advantage of new deals appearing prior to the start of the higher Isa allowance on 6 April.
They will be pleased to hear that there has been a significant improvement in the time taken to complete a transfer.
Isa’s often offer an introductory interest rate which can plummet after a year, making it important that savers switch to a different Isa immediately.
However, between 2008 and 2010 it took around 26 days to transfer a cash Isa, prompting a super-complaint by the statutory consumer champion ‘Consumer Focus’ to the Office of Fair Trading (OFT).
Consumer Focus warned that the lengthy transfer process could lead to savers losing up to £3 billion a year in interest.
The organisation also called for savers to be given clearer information about interest rates.
Since then substantial improvements have been made, according the OFT’s latest review, with 93% of cash Isa transfers completed within the new timeframe of 15 days in 2011.
If a transfer is delayed, guidelines now require the new provider to backdate interest to either the date on the cheque or to day 16 of the transfer process, to ensure the saver does not miss out.
Providers have also improved transparency over interest rates, which are now included in Isa statements.
This should help a large number of savers, as recent research by comparison site uSwitch.com found that more than half of cash Isa savers do not know what rate of interest they are earning.
From 6 April 2012, the overall ISA allowance is increasing to £11,280.
Savers can place all of the annual tax-free allowance in an equity Isa, which invests in shares and funds, or the allowance can be split, with a maximum of £5,640 going into a cash Isa.
The limit is indexed annually in line with the increase in the Consumer Prices Index.