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Consumers to ‘save millions’ as ISA transfer times cut
Providers of Individual Savings Accounts (ISAs) have agreed to speed up the process for switching accounts following a new report by the Office of Fair Trading (OFT).
The OFT has agreed with the banking industry to reduce the time it takes to transfer an account to 15 days by the end of the year, with the long term aim of lowering this to just a ‘handful’ of days.
It currently takes an average of 26 days for customers to move their cash to an alternative provider.
The protracted process also means that account holders often miss out on interest that they would have accrued during this period.
Consumer Focus, the body which brought the supercomplaint to the OFT, estimates that lowering the transfer time will gain customers up to £14.5 million a year in interest.
Mike O'Connor, Chief Executive at Consumer Focus, welcomed the move. ‘We live in the age of keyboards, not quills. ISA transfers should take days not weeks, certainly not over a month,’ he said. ‘For competition to work for consumers, they need to be able to switch simply, quickly and with the right information.’
His thoughts were echoed by the watchdog’s senior director of services, Clive Maxwell: ‘The voluntary changes announced will give consumers a fairer deal. This will give consumers much better tools to shop around.’
It is thought that around two million people switch their tax-free ISA accounts every year.