Halifax cash ISA Promise
Halifax has announced the details of its cash ISA Promise, an industry leading move to help drive a fairer deal for customers when transferring their cash ISA.
Cash ISA transfer problems cost savers £24 million each year
Halifax estimates that transfer delays cost cash ISA customers £24 million each year in lost interest.
An investigation by the Office of Fair Trading (OFT) into the cash ISA market earlier this year found that switching a cash ISA takes 26 calendar days on average. 25 per cent of transfers take longer than 30 calendar days. During this period, customers switching their cash ISA to a better rate currently earn the lower rate paid by their existing provider.
The OFT also found that there can be a gap of up to five days during which interest is not accrued when consumers transfer their cash ISA.
Halifax takes the industry lead on shake up of Cash ISA Transfers
The Halifax Cash ISA Promise, which takes effect from the 2nd October, addresses the key issues customers face during the lifetime of their cash ISA:
losing the benefit of a better deal due to delays in the transfer process
access to ‘best buy' deals only available for new customers
lack of interest rate transparency on savings statements
lack of advance notification if any initial reward or fixed rate is due to end
The Halifax Cash ISA Promise will form part of cash ISA terms & conditions with effect from 2nd October 2010. The key elements of the Halifax Cash ISA Promise are:
Halifax will pay interest from day one that a customer's completed ISA transfer application form is received.
Halifax cash ISA accounts are available to both new and existing customers.
Halifax cash ISA interest rates will be clearly displayed on Cash ISA statements, online, in branch or over the telephone from July 2011.
Halifax cash ISA customers will also receive advance notice if any initial reward or fixed rate is due to end.
Closing the £24 million interest rate gap for customers
With effect from 2nd October 2010, all customers switching their existing cash ISA to Halifax will earn interest from the first day their completed application form is received either in branch or by post. This means that customers switching to a better interest rate will not be disadvantaged by the time taken to transfer their cash ISA from their current provider. The Halifax Cash ISA Promise means that customers will earn the new, better, rate they are switching to throughout the transfer process.
Transparency for cash ISA customers
The Halifax Cash ISA Promise includes a clear commitment that cash ISA accounts will be available to new and existing customers. Halifax has been one of the few providers to consistently offer its cash ISA accounts to both new and existing customers.
Last week, Halifax launched the market leading cash ISA Direct Reward paying 2.80 per cent AER/Tax Free (variable) for 12 months. For customers who hold their main current account with Halifax the ISA Direct Reward interest rate increases to 3.00 per cent AER/Tax Free (variable) for 12 months.
Halifax is also improving the transparency of customer interest rates. From July 2011, interest rates will be prominently displayed on customers' savings statements as well as online. This means cash ISA customers will be able to obtain their interest rate online, in branch or over the telephone from July 2011.
Halifax cash ISA customers will also receive advance notice if any initial reward or fixed rate is due to end. At this point, they will be invited to review the savings deals available for them either over the telephone or with a branch based adviser.
Russell Galley, Managing Director of Savings, said: "The cash ISA is a great, tax efficient, way to save and is at the heart of many families' approach to building a nest-egg.
"Improving the transfer process between providers is vital. When a customer chooses to move their money from one cash ISA provider to another they cannot do so themselves without losing the tax advantage of a cash ISA. They are wholly reliant on their existing and new providers carrying out the transfer on their behalf.
"We have always said that improving the process needs to be an industry wide initiative. This will ensure people are not deterred from making the most of their tax free savings allowance. We were one of the first providers to adopt the electronic cash ISA payment process. The majority of providers are yet to adopt this more efficient process, when they do even more customers will reap the benefits."