Compensate for ISA hassles, says watchdog

28 July 2008

Financial ombudsman calls for compensation for ISA transfer delays

Banks and building societies are being pressed, by the financial ombudsman, to give customers compensation for the “distress and inconvenience” they have experienced because of severe delays with ISA savings account transfers.

Current guidelines from Revenues and Customs stipulate that switching an ISA should take 30 days. However, thousands of customers who transferred funds during the ‘transfer season’ have found that it has taken much longer than this for their money to arrive at their new accounts, despite the fact that it has disappeared from their previous account.

Emma Parker, of the Financial Ombudsman Service, said: “The good news is that the complaints we have tackled so far are being settled by banks and building societies concerned as soon as we approach them.

“The main problem that needs resolving is a loss of interest for customers who have waited weeks for a transfer.

“In extreme cases where someone is especially vulnerable or has spent a particularly long time pursuing their bank or building society we are suggesting an extra payment is made for the distress and inconvenience caused,” she added.

Philip Cullum, acting chief executive of the National Consumer Council, said to The Observer in a letter last week: “The banking sector recently introduced a major new system allowing faster electronic payments, so many consumers will be bewildered to learn that financial institutions are still using cheques for ISA transfers.

“The fact that some institutions seem to be profiting from their own inefficiency is a particular cause for concern.

“We call on them to sort out cases stuck in the current clearing system and to adopt 21st-century procedures to ensure that no saver ever loses out like this again,” he added.

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