Cash ISA Switching Faster Following OFT Action
A review published by the OFT has found that providers of cash ISAs have shortened transfer times significantly since the OFT intervened in 2010.
The review, which has been released at the start of the cash ISA switching season, found that more than 90 per cent of all cash ISA transfers carried out last year were completed within 15 working days. Additionally, providers of cash ISAs are now back-dating interest if the transfer is delayed beyond this, and are publishing interest rates on cash ISA statements.
These initiatives to improve the market for cash ISA consumers were agreed with or recommended by the OFT in June 2010 following a super-complaint from Consumer Focus.
The OFT’s review of progress on these and other voluntary initiatives by providers of cash ISAs, part of its ongoing work in the banking sector, found that 93 per cent of cash ISA transfers in 2011 were completed within the new 15 working day guideline; if delays do occur, providers of cash ISAs are following new industry guidelines that require the acquiring provider to back date interest either to Day 16 of the transfer process, or to the date on the cheque – whichever is earlier, and all providers of cash ISAs surveyed by the OFT are now publishing the interest rates that apply on cash ISA statements.
Claire Hart, Director in the OFT’s Services, Infrastructure and Public Markets Group, said: “People considering switching their cash ISA in the new tax year should have confidence that the process will be quick and effective, and that if things do take longer, they won’t lose out financially. We welcome the progress made by providers of cash ISAs since the OFT took action in 2010 but we would encourage the industry to consider ways to reduce cash ISA transfer times further.”
Over 40 per cent of cash ISA transfers in 2011 were in April, May and June.
As part of its work on this review, the OFT analysed transfer data from the British Bankers’ Association and surveyed 14 providers of cash ISAs, making up around 80 per cent of the market by value.
In June 2010 the OFT responded to the Consumer Focus super-complaint on cash ISAs (see press release OFT secures improvements for cash ISA customers following super-complaint, 29 June 2010). Since then, the FSA has been monitoring performance against the new 15 working day guideline, intervening where necessary to improve performance.
The OFT’s investigation in 2010 found that, across the period April 2008 – April 2010, transferring cash ISAs took just over 26 calendar days on average, with 25 per cent of transfers taking longer than 30 calendar days.