/ Money

We put banks to the test on cash Isa advice…

Cartoon of man holding Isa football shirt, illustration by Peter Pachoumis

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).

Cash Isa advice infographic

‘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?


I called Santander a couple of days ago and they were very unhelpful. I was told that transferring an ISA would use up my 2012/13 allowance, which is not true.

On the other hand Virgin Money were much more helpful when I asked what to do about a Northern Rock ISA that I should have dealt with when it reached the end of its two year term a few months ago. I had to call back today and spoke to someone else who was very helpful.

Why do we have to put up with this ISA merry go round every year. I find it very stressful. First find a provider who will allow you to transfer funds from other providers, then one that will allow you to pay in additional funds during the year and finally, find the best interest rate for one or two years. I usually end up with two accounts when I really want to have it all in one account.

I always thought that people complaining about the problem managing their investments were bonkers – this was when I had very little savings. Now I’m going bonkers and I’m nowhere near the savings protection amount.

Most banks don’t want you to put in more money in than a certain amount as discourage by lesser incentives & inflexible rules .Typical .So you are standing in the Bank stating no wonder there is a credit crunch . This is insane & what happens when the call centres rule. False economy?

Opened the remainder of my 2013-13 ISA allowance (after setting up a Stocks & Shares ISA) and also transferred an existing ISA to Santander earlier this week.

The person doing the transfer was most helpful, and suggested that I did not attempt to use up the full ISA allowance, but leave a small margin – there is still a little uncertainty about the precise amount invested in the S&S ISA due to dealing costs – otherwise I might get a letter from HMRC.

Excellent service!

Rob says:
22 March 2013

I think one of the biggest scandals about cash ISAs (and I’m rather surprised that Which? hasn’t mentioned it here) is the fact that some banks cut the rate very soon after the product is launched. A friend of mine transferred into an M&S cash ISA last year. Soon afterwards he received a letter saying the rate was being cut from 3% to 2%. Then he got another saying the rate was being cut to around 1.5%. How can M&S justify this? It’s outrageous. If you want to move your money out of there you have to forfeit most or all of the interest you’ve accrued.

This is why a fixed rate ISA is for some a better product, especially in this economic climate. We are not seeing many ‘green shoots’ and I read that another credit agency is considering if they should downgrade the UK’s credit status.

I have a two year fixed rate ISA with Halifax which matures in a few weeks and another ISA with the Post Office which had a reasonable interest rate until very recently when the rate fell drastically. I shall be looking to set up another two year fixed ISA with a provider that allows transfers in to the account and I shall be transferring my Halifax and Post office ISA funds to it. Any money I save in the next year will have to be saved in a new ISA.

But you have to be very careful to ensure that the cash can be taken out in an emergency.

A better strategy is a mix of fixed interest rate bonds maturing say, 1, 2 and 3 years hence, which should enable you to the benefit of (slightly!) higher rates for the longer term bonds, plus an instant access account for emergencies,

My second cash ISA is always an instant access account but the rates have plummeted recently for such accounts – that is why I find it all so stressful. I don’t know anything about bonds except the tie in for a fixed period. I wouldn’t have thought of saving in a bond in preference to an ISA due to the tax free status of the ISA. I shall have to find out more about them.

john sidey says:
19 March 2016

which? (page 49 April issue) says you can only open one ISA in 2015-15 whereas you can open one ‘cash’ and one ‘stocks and shares’ ISA to the total maximum of £15240