Tens of millions of pounds of cash Isa money has been mislaid by mishandling banks and building societies who are taking months to perform basic transfers.
Following our revelations of transfer mayhem last month, we have received more than 1,700 letters and e-mails from those who attempted to move their cash Isa but now say their money is lost in the system.
After learning that it was top of our Isa grievances league (see graphic below), Nationwide announced it would stop accepting transfers in until it had dealt with its backlog.
Cash Isa transfers are supposed to be performed within a lax 30-day deadline. But some are taking three months or longer. And instead of helping desperate customers and working to solve the problem, they are squabbling among themselves and leaving savers in limbo.
Savers can have around £ 50,000 in cash Isas. But those entangled in this chaos can miss out on the best deals that are often only available for a short time, lose interest, have no access to their money and worry that it is lost altogether.
Those making a complaint include:
– Pensioner Sheila Trafford from Preston, who applied to transfer her cash Isa to Lloyds TSB from Intelligent Finance on March 4. She is still waiting for her money to turn up.
– Jenny Cole from Eastbourne in East Sussex has waited since mid-April for # 17,000 to be transferred from an easy access account with C&G to Nationwide Members’ Isa Bond.
– Sandra Norman from Letchworth in Hertfordshire has been trying to transfer her substantial Isa savings from Nationwide to Lloyds TSB since April 1.
– Sandra Blake from Stratford-upon-Avon had to wait from April 17 until July 2 for her money to be transferred from one Isa to another, even with the same bank. Bradford & Bingley took 76 days to move her money from its Capital Saver Isa to its Good for Life Isa.
Balances in cash Isas have passed the # 150bn mark and, with the number of transfers increasing, the problem is not going to go away.
But banks and building societies stick by a slow-coach process, which involves posting your money to each other by cheque. Forms and cheques get lost in the post while backlogs build up as they have too few personnel.
Vince Cable, Liberal Democrat MP and Treasury spokesman, says: ‘It is outrageous that banks should be using cheques rather than electronic transfers to move money. Whether it is incompetence or a cynical attempt to pocket money from their own customers, it is an example of them serving their inefficiency.’
Banks who blame HM Revenue & Customs rules are misinformed. HMRC told us: ‘We have no objections to electronic transfer of the money. If any Isa manager believes that HMRC regulations require them to transfer by cheque, they are mistaken.’
THE PRIMARY CULPRITS
Three weeks ago we asked you to send details of your Isa transfer traumas, promising to forward them to the chief executives of those to blame.
Our graphic shows the worst five bunglers: Nationwide, Lloyds TSB, Halifax, Bradford & Bingley and Abbey. But others have also let down their clients. Alliance & Leicester has 92 complaints, Barclays-83, Cheltenham & Gloucester 45, Britannia 35 and National Savings & Investments 35.
These complaints are not related to size. Nationwide has clocked up 401 complaints against just one, from Coventry Building Society. If Coventry had treated its customers as shabbily as Nationwide, its total would be 38 complaints. The giant HSBC received just 25 complaints.
Such is the chaos in the Isa system that the Banking Code Standards Board felt forced to intervene. Its chief executive Robert Skinner said last week: ‘Banks and building societies should seriously consider suspending marketing and accepting new accounts until backlogs are cleared and adequate resources put in place.’
So what do those responsible have to say?
Graham Beale, chief executive of Nationwide, the worst culprit says:’ I unreservedly apologise to Money Mail readers affected by this issue. We will address each letter within 21 days.’
Nationwide’s poor service stems from tens of thousands of Isa transfer requests, many more than anticipated. It planned for twice as many transfers this year as last, but it was not enough. It has drafted in 250 extra staff to deal with the backlog.
Helen Weir, director of UK retail banking at Lloyds TSB, says:’ I apologise to Money Mail readers. We will contact them directly to put matters right.’
Original story : This Is Money
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