Nationwide suspends ISA transfers
Nationwide has temporarily stopped accepting transfers into its cash ISA after a 400% increase in the number of requests.
The building society, which is the second largest cash ISA provider in the UK with around four million customers, says the suspension is a temporary measure while it clears its backlog of applications. It has received tens of thousands of requests for ISA transfers so far this tax year, resulting in long delays and sluggish service.
Roy Beale, a spokesman for Nationwide, refused to set a date when transfer requests would be accepted again, but said it would be a matter of weeks rather than months.
He added: “The amount of requests we have received have been beyond what we predicted – we were expecting an increase of 100% from last year but instead we’ve seen a 400% increase.”
Beale puts the rise in applications down to the current climate: “People want to move their money into a building society rather than a bank. Plus our fixed-rate ISA bond has been very popular.”
The building society will honour all applications received prior to Monday 7 July, but all other applicants will have to wait until the backlog is cleared. However, customers who have another ISA with Nationwide and want to make a transfer are not affected, and transfers into equity ISAs continue to be accepted as normal.
Beale says customers caught up in the problems will not be left at a financial disadvantage because Nationwide will backdate interest.
However, new rules from the Treasury mean that banks and building societies can only make backdated payments from the date they receive your application – not the funds.
Beale says that customers who go to their old ISA provider to arrange a transfer – with the funds sent straight across - are therefore at risk of not receiving their full backdated interest.
Nationwide's current fixed-rate ISA range allows you to fix an AER of 6.15% for one, two or three years, on deposits from £1. However, until further notice transfers are not accepted so if you are looking to open a new ISA and have a transfer to make then you will have to look elsewhere.
If you want a fixed-rate ISA, then Julian Hodge Bank pays 6.5% AER for
one-year and accepts transfers. You’ll need to deposit the full £3,600
upfront though. It also offers two-year and three-year accounts both
paying 6.4% AER.
Or Skipton pays 6.4% AER on deposits from £50. This rate is fixed until 14 December 2009
For a variable rate ISA, Ruffler Bank currently offers one of the most competitive ISAs, paying 6.25% AER on deposits from £3,600. However, you will need to give 30 days' notice if you want to make a withdrawal.
Alternatively, Icesave offers an easy access ISA paying 6.1% on deposits of £1,000. If you have less to save, then Barclays pays 6.25% AER on deposits of just £1 and allows instant access. However, this rate includes a 1% bonus for 12 months.
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.
Where APR is the rate charged for money borrowed, Annual equivalent rate is how interest is calculated on money saved. The AER takes into account the frequency the product pays interest and how that interest compounds. So, if two savings products pay the same rate of interest but one pays interest more frequently, that account compounds the interest more frequently and will have a higher AER.