/ Money

Would you rely on your bank’s Isa advice?

Bank staff

Do you know your Isa from your elbow? No? Well you’re not really expected to, but your bank is…

This isn’t the first time we’ve talked about this. Indeed, last year we called on banks to improve their standards of service after we found them failing to answer basic questions about Isas. Disappointingly, we’ve found the same again.

Your bank’s Isa advice

Posing as customers, we visited six branches and made six phone calls to 12 Isa providers, and asked them six straightforward questions about Isas and the savings reforms. Over half of the providers we tested got fewer than half of the questions right.

This includes questions like what the 2016/17 Isa limit is – eight in ten staff couldn’t tell us this. It’s £15,240 in case you wondered. One of the banks even suggested we use the internet to find the answers to our questions! I suppose it was good that they were honest about their lack of knowledge…

In short, it seems staff are letting us down with poor knowledge of how Isas work and there’s really no excuse for this. At the end of the day, bad advice could leave people out of pocket.

There was also little or no knowledge at all about the new personal savings allowance, which is worrying as these changes come into effect just next month. From 6 April, basic rate tax payers will be able to earn £1,000 in interest a year on their savings.

How are customers meant to understand Isas when bank staff don’t themselves? All of this just shows that banks need to up their game and ensure they have the right systems in place so that you can rely on their advice.

We want better banks

I’m sure you’re one of the 47,000 or so people who has signed our We Deserve Better Banks campaign. But if you’re not, I’ll briefly fill you in. We’re calling on the Government, the regulator and the banks themselves to deliver better everyday banking. And our latest undercover investigation illustrates the need for change.

Last week the Competition and Markets Authority (CMA) delayed announcing findings from its major banking inquiry. There’s much the CMA could use this extension for, such as bringing forward stronger solutions to tackle unfair charges. However, it should also ensure that the knowledge and expertise of staff is recognised as a key measurement of banks’ customer service. This information is crucial in helping you choose the right bank for you. If you agree with us, please sign our Better Banks petition:


Have you tried to get advice about Isas or savings from your bank? How did that go?

Comments
Profile photo of John Ward
Member

I am not sure that anyone outside the Treasury and the Chancellor’s office know what the 2016-17 ISA allowance will be. The 2015-16 limit is £15,240 – it might remain the same into the new tax year but it could be altered in the budget on 16 March 2016.

As I understand it, the annual ISA limit is adjusted annually in line with inflation rounded to the nearest £120. Whether that triggers a rise next year I have not worked out. The inflation measure used was changed from RPI to CPI with effect from 2013-14.

12/03/16

Profile photo of John Ward
Member

I see from one of the links that Which? has worked it out: it says “In September 2015 the CPI was -0.1% so the ISA limit for 2016-17 is likely to remain frozen at £15,240”. So no certainty yet, and it would be irresponsible for an ISA-provider to venture a definitive answer to such a question.

Profile photo of malcolm r
Member

Useful figures here:
gov.uk/government/publications/tax-and-tax-credit-rates-and-thresholds-for-2016-17/tax-and-tax-credit-rates-and-thresholds-for-2016-17
ISA unchanged.

Profile photo of John Ward
Member

Patrick – Would it possible to see the “six straightforward questions about ISA’s and the savings reforms” that were put to the staff of the ISA providers?

Profile photo of Patrick Steen
Member

Yes, I meant to post these yesterday. Here they are:

– In December 2015 and January 2016 we tested 12 Isa providers. For each, we visited six branches and made six telephone calls (in the case of phone and online-only bank First direct, it was 12 calls). Each time we asked six questions about ISAs and the savings reforms:
– My mother/father/relative has a cash Isa with another bank and is thinking of transferring it. They regularly pay into it. Could you tell me how they would go about doing this? What are the options here?
– Are there any rules about how much of an existing Isa they can transfer?
– My mother/father/relative also has some savings in a stocks and shares Isa and is considering moving them to your Cash Isa. Can you transfer from a stocks and shares to a cash Isa and vice versa?
– What will the new Isa cash allowance be as of April 2016?
– My mother/father/relative mentioned they read something in the paper about inheriting Isa allowances. What are the rules on this?
– I have heard there are more changes coming to the savings market in April? Can you explain what is happening?

Profile photo of william
Member

1) Transferring into a new ISA depends on the bank etc. Some allow it some don’t. But if they regularly pay into one they may be better off looking to see if they could use a regular saver account instead, as they pay higher interest.
2) see 1) depends on the bank /product etc.
3) As long as any money doesn’t leave the respective ISA wrapper.
4) As the budget might change it, its hard to say. probably wont be less the current allowance which is around £15,250.
5) Not sure, but I doubt it
6) 1st £1000 if interest is tax free for a normal tax payer, or £500 for a higher rate tax payer.

Profile photo of Patrick Steen
Member

Hello William, sorry for the delay and thanks for having a go!

1. When we asked banks about this we wanted the bank staff to outline all the ways a customer can transfer in (eg. cash Isa transfer). Though you’re right that it does depend on whether the bank is offering transfers in.
2. If you want to transfer this year’s Isa then you can transfer the whole balance. If you’re transferring previous years, it’s up to you how much you transfer.
3. Yes you can transfer as many times as you like.
4. The 2016/17 limit remains the same as the previous year’s – £15,240
5. Actually, the Isa wrapper can be inherited by a surviving spouse who will receive an increased subscription limit at the beginning of the next tax year to allow them to shelter the inherited funds tax-free. This reform was introduced in 2014.
6. Spot on 🙂

I’ll leave you to score yourself! 😀

Profile photo of william
Member

Thanks Patrick, No probs about the delay. Not the usual high standards I set for myself, and sadly for everyone else on the planet. But I guess I’m better than all the high street banks. Which isn’t much comfort.

Profile photo of John Ward
Member

You got away with No. 4 Patrick – the Chancellor very nearly uplifted the limit but deferred it to 2017 when it will be £20,000 a year [I noticed the BBC website didn’t qualify it by mentioning the implementation date leaving readers to believe they can stash more of their cash in an ISA wrapper in three weeks’ time]. No wonder people get confused . . .

Profile photo of malcolm r
Member

Which ISA providers were asked these questions?

Profile photo of Patrick Steen
Member

First Direct, Post Office, Nationwide, Halifax, Lloyds, HSBC, Co-op Bank, Santander, NatWest, TSB, Barclays, Yorkshire Bank.

First Direct did the best with a score of 74%. Yorkshire Bank did the worst with a score of 38%.

Profile photo of John Ward
Member

The current Cash ISA’s are successors to the original TESSA’s [Tax Exempt Special Savings Accounts] which, when introduced , offered a more generous yield than ordinary, taxable, savings products. Over the years the providers have eaten most of this advantage and the returns, while still better than other instant access savings accounts, are not impressive with interest rates marginally over 1% AER. While a recommended component of a savings portfolio I feel they are no longer a must-have.

Member
jean says:
14 March 2016

The banks are sneaky they rob the less well off community by putting big charges on when they just go over a couple dollars
then these people are less well off when their next pay goes in as they have to pay the banks back… it doesn’t make sense to me at all..

Profile photo of John Ward
Member

I realise that this rightly belongs in another Conversation about charges for unauthorised overdrafts, but it’s odd to be saying that the banks “rob” people who take money they haven’t got. At least the banks have the decency to tell people in advance how much they will charge them for their unpermitted borrowing and the interest rate that will apply.

Profile photo of Patrick Taylor
Member

I have a grave problem with this Conversation. As it stands the Conversation talks of ” How are customers meant to understand Isas when bank staff don’t themselves?. Is this Which? asking the trained financial staff or simply “bank staff”?

Incidentally the Govt and many institutions believe that ISA is the proper acronym not Isa. Perhaps Which? can explain why they choose to use a non-standard term. Is it to make it easier for subscribers?

Profile photo of John Ward
Member

Is there a single one of the eleven test institutions [i.e. ignoring First Direct] that doesn’t have a detailed booklet about their ISA’s on display in the branch office or the banking hall?

It would be interesting to know how the responses to telephone enquiries compared with information given at the counter – I would expect call-centre staff to be clicking on an ISA screen as they dealt with the enquiry and finding a prepared script to answer each question. Counter staff should also have a similar facility but being under observation they might be less prepared to access it and are tempted to deal with each question off the top of their head.

I wonder whether there were any questions they all got right, and any they all got wrong or didn’t know.

I think the final, rather vague, question would floor most people. I presume it’s about the changes in the tax treatment of savings interest [abolishing w.e.f. 06/04/16 income tax on the first £1,000 for people taxed at the 20% basic rate]. This will virtually blow cash ISA’s out of the water.

Profile photo of Patrick Steen
Member

Hello dieseltaylor, when we carried out the visits and phone calls we asked the first member of staff if they could help with our questions. If they said they couldn’t, we were happy to be put through to another department (the savings team) or to wait for another member of staff who might know more to speak to us if there was someone available.

On the way we write Isa – we’re using a standard rule for abbreviations across the board. If it’s written with capitals eg. FCA, then you say each character individually ie. you’d say F C A. If it’s written with lower case letters eg. Isa, you say it as one word (pronounced ‘eye-sah’). I hope that makes sense.

Profile photo of Patrick Taylor
Member

Well its novel to think that nobody would pronounce it ISA unless they were spelt Isa. Isa mistake made more likely by your standard?

I would argue that for those who deal with jargon routinely this is a lazy shorthand but perhaps not that helpful to the majority who may for a time believe there are two products. The Economist is helpful and respected:
” If an abbreviation can be pronounced (eg, EFTA, NATO, UNESCO), it does not generally require the definite article.”

economist.com/style-guide/abbreviations

Profile photo of Patrick Taylor
Member

It has been a long time since I trained Bank staff on product knowledge but I would not expect or train all staff to the detail required for the ISA queries you put. You train those who have the ability to learn and a restricted number as this is a product where the Govt. meddles which means training is not easily scheduled. Keeping all staff up to speed on any complex product is now probably impossible as most branches are de-staffed and a specialist is called in for the majority of complex stuff.

Reading Conversations we know that people find it very difficult to do mundane stuff like opening Accounts or adding signatures , or powers of Attorney being recorded.

Banks are not what they were in so many ways so my expectation is that at only a very simple level would they be reliable. Taking average staff out of their comfort zone would be very easy.

Profile photo of wavechange
Member

A bank can only advise on its own products. There are plenty of other sources of information that would be a good starting point. Once a company has been chosen it’s worth reading the terms & conditions carefully.

Member
Elliott says:
23 March 2016

A bank should only advise on its own range of products.

There are lots of other sources of information out there and once a product has been chosen it’s worth reading the terms very carefully.

Member

Your question “how many Isas can I fund in one year”. A more precise answer would be:

You are entitled to have one Cash ISA, one Innovative Finance ISA and one Investment ISA, also known as a Stocks and Shares ISA, each tax year. These can both be with the one provider, if they offer all types, or with separate ISA managers. You must make sure to remain within your annual allowance across all different ISA types.

Member
RALPH NOCK says:
3 April 2016

I am afraid the banks are not the same these days, as they are out to scam you out as much money as possible the friendly bank manager and his friendly advise without pressure has now gone, you are just a number now, to be taken to the cleaners if need be, by their banks so called advisers, trying to get extra bonus for themselves or for promotion.

The friendly advise has now gone and will if allowed sign you up with some pressure for their own ISA or Savings Accounts, when in fact if you looked around there are better deals going, it pays to shop around these days, this from my own experience, this includes the Credit Unions for your ISA savings, where you know that your money not lining some ones pocket in excessive bonuses. R.Nock

Member
Derek Foster says:
6 April 2016

Banks have reduced staff in the branches to reduce costs to the disadvantage of customers. Myself I am looking to get a better deal frequently.

Member
Aileen Chase says:
13 April 2016

Lloyds failed to send annual statement as not used for a while .
When used they treated it as closed . Plenty of money to cover the cheque which they bounced.
Rejected a paying in cheque. Rejected a bank transfer out.
This was a family account with my husband …. Deceased so little used.
He did earn two payments after death. Publication fees.
I was his beneficiary.
I have my own personal account elsewhere.