Joe McGrath asks what considerations should be made before deciding to switch ISA providers.

Anyone who has previously completed an ISA transfer will appreciate the difficulties that can occur all too often.
In recent years, customers of Bradford & Bingley, Northern Rock and Icesave were all affected for obvious reasons.
Requests to switch providers, especially during peak season, can be met with delays raising cheques or funds disappearing for days on end while one account is closed and a new account is opened.

Despite the detailed guidance that has now been issued to ISA managers from HM Revenue & Customs (HMRC) on transfers, there is still no shortage of complaints from investors who have experienced delays at the hands of providers.

So, with ISA season coming to a close, it is worth knowing where you stand.

What can be transferred?
Under the current rules, investors can transfer from one ISA manager to another at any time they wish, whether this be their current-year ISA subscriptions (and related income) or all or part of their previous years’ subscriptions.
While subscriptions to stocks and shares ISAs can only be transferred to another stocks and shares ISA, subscriptions to a cash ISA can be switched to either a cash ISA or a stocks and shares ISA.

According to HMRC, where the current-year subscriptions are being transferred from a cash ISA to a stocks and shares ISA, the current-year subscriptions are treated for all ISA purposes as if they had been made to the stocks and shares ISA.

The investor will be treated as if he or she never invested in a cash ISA to begin with. Therefore, an investor can take out another cash ISA within the same year without breaching the rules.

Holly Heald, financial adviser at Norfolk-based Just Financial Solutions, explains that it is important that investors remember the benefits of shopping around for the best deal as it can make a significant difference.

She explains, ‘In my experience, many people forget that, even if they do not want to commit new monies to ISAs, they can usually switch some of their existing savings or investments into this largely tax-exempt environment.
‘This simple and low-cost option can soon see a significant proportion of clients’ portfolios sheltered from tax – and, even better, from the arduous process of declaring these investments on their tax return.’

Simon Stannard, client relationship manager at Courtiers, reminds investors to take advice if they have any doubt as to which ISA is the best product into which to transfer.

He explains, ‘While the tax benefits of ISAs are clear, they are not always the most suitable product for everyone. Professional advice should be taken before committing funds to such an arrangement.’

When things go wrong
When transfers do not go as planned, it can be frustrating. There are many reasons why this might happen, but knowing your rights can often goad the providers into action.

First of all, check the terms from the provider. If the provider said at the outset that the transfer would take no longer
than 28 days, make contact and explain your situation.

If the provider is unable to give adequate reasons for the delay, or justify its actions, consult its complaints procedure. The next step would usually be to complain in writing. This will normally promote your case to the priority list for processing.

If the delay continues, you have the option to contact the Financial Ombudsman Service. As a rule, the FOS encourages all investors to try to resolve difficulties with the providers individually, but if this proves difficult its complaints service can help.

A free hotline is available to consumers on 0300 123 9 123.