Recent investigations by the Office of Fair Trading (OFT) show that ISA savers may not be getting a fair deal. Around 11% of Cash ISA holders switch their deposits to a new provider each year. However, following a ‘supercomplaint’ from watchdog, Consumer Focus, the OFT found that cash ISA transfers take an average of over 26 calendar days (against industry guidelines currently set at 23 working days).
Having to wait nearly five weeks after you have made a decision is a long time. In addition, over this period, the OFT found that consumers not only miss out on the higher rates which pushed them to transfer in the first place, there is also a period of up to five days during which they receive no interest at all! The OFT has, unsurprisingly, deemed this unacceptable and has now reached agreement that transfers and interest rates on cash ISAs become more transparent. From 31 December 2010, the OFT recommends that transfers take no longer than 15 working days. Consumer group Which?, however, wants to cut this further, to no longer than 10 days, and also wants a fully electronic transfer system to be set up.
The OFT has therefore recommended that research be done to see whether an electronic transfer system is feasible. They also believe the new rate of interest should be paid from day 15 of the transfer period – even if the transfer remains incomplete – and that interest rates be published on statements (from 2012). Despite the final disagreements, after so many years delaying the process, it is good to see that something is finally going to be done.
