Cash Isas are a popular and well-established way to save, but our recent investigation reveals that some of Britain’s biggest banks are failing to give the right advice when it comes to transferring these savings.
Cash Isas are not a complicated product, but there are certain rules you need to follow to maintain the tax-free wrapper, particularly when it comes to transfers. But worryingly, it seems you can’t always rely on your bank or building society to provide accurate information about these tax-free savings vehicles.
We placed a total of 180 calls to 15 leading banks and building societies to assess the quality of advice given to people who want to transfer their cash Isas. Shockingly, big names such as HSBC, Yorkshire Bank, Royal Bank of Scotland, First Direct and Barclays failed to give correct answers to three simple cash Isa questions in more than half of the calls we made.
In fact, just 16 of the 180 advisers we spoke to gave correct answers to all of the questions we asked. You can see the best and worst banks in the graphic below (click to enlarge).
‘Just withdraw your funds’
RBS, which finished third from bottom in our tests, told one of our researchers to ‘just withdraw your funds, close the account down and transfer it over to somebody’ when we asked about how to move our cash Isa to another provider. This was also the information provided by some advisers at Lloyds TSB, NatWest and Yorkshire Bank.
This advice is dangerously wrong – acting upon it would mean losing the tax-free status that makes saving in an Isa so attractive. Instead, you simply need to contact the provider you wish to move to, and it will initiate the process.
Only 28 of the 180 advisers gave a full, correct explanation of the rules on how much you can transfer. One HSBC adviser incorrectly told us that you had to transfer a minimum of £10,000. There is no minimum or maximum transfer amount, but if you’ve already opened an Isa for the current tax year, you have to transfer the full amount. When it comes to Isa subscriptions from previous years, it’s up to you how much you move.
In more than a third of calls, the advisers we spoke to were not aware that you could move to a stocks and shares Isa from a cash Isa, even though this has been possible since 2008.
‘There’s no limit’
Worryingly, in six out of the 12 calls we made to Yorkshire Bank, we were given the incorrect Isa limit – one of the most basic facts about Isas. One adviser even told us there was no limit at all! Two call handlers at HSBC also gave the wrong figure, while another HSBC employee said ‘we cannot provide that information’.
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.
Would you turn to your bank for information about cash Isas? If you’ve ever done so, were you happy with the advice you got?