Why can’t I transfer my Cash ISA?

I’ve been trying since August and the banks blame each other

I never thought transferring my Cash ISA would be apparently impossible. 

But let me tell you all about it. 

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My ISA drama

Transferring an ISA is supposed to be straight-forward. You make a request via the ISA provider you want to move your money to by filling out an ISA transfer form. 

And according to the Government website, it should take no longer than 15 working days to transfer Cash ISAs (although it can take just seven days for electronic transfers).

So why has mine taken nine months?

I’ve had an old Cash ISA with Royal Bank of Scotland for YEARS. Most of the balance went towards buying a flat with my brother over six years ago (we’ve since amicably split and live with our partners now). 

I didn’t pay it much attention as it wasn’t a huge pot, and I was saving and investing elsewhere. But as my savings grew, I decided to open a new Cash ISA with Shawbrook Bank in August 2023, with a decent interest rate of 4.34%.

I filled in an online ISA request form in my online Shawbrook Bank account (the first of so many) and waited. Shortly after I received a text from RBS acknowledging the transfer request. 

But then a few days later, as would become the pattern, I got a message from Shawbrook Bank saying the transfer could not be completed. 

At first, I thought it may be because my ISA was inactive. So I called RBS and they reactivated it. I tried again. No luck.

I resubmitted the request. It was rejected again. I called RBS who said it should work. Tried again. Called RBS. Called Shawbrook. Tried again. I’ve lost count of all the requests but we’re looking at more than a dozen.

Neither bank could really explain what the issue was and both blamed the other.

My complaint

I wasn’t getting anywhere so I made two complaints – one to each bank. 

I don’t love complaining, but as I said to Andy on our podcast recently, I do when necessary. And I always try to praise companies too.

In my complaint I outlined the issues. At the time, I’d made at least seven transfer requests, which had all failed. I also said I’d had very little help from either bank getting the matter resolved or even explaining what was going wrong.

A member of RBS’ complaints team swiftly followed up by phone and sent me an email offering £100 compensation. I promptly emailed back (after receiving another rejection message from Shawbrook) and they added another £50 to my account. 

I had regular contact with Helen from RBS – I emailed every time I made a new transfer request – but we still didn’t really get anywhere. 

Shawbrook was slower to act. A week or two after I emailed my complaint I received a letter by post saying it was being looked at and I would receive a full response in 30 days.

What did the banks say?

Initially, both RBS and Shawbook refused to take responsibility for the transfer issue.

RBS explained there was an active ISA transfer request outstanding as of August. And as this original transfer request had not been cancelled by Shawbrook, it could not process any new requests. It said it had not made any errors. However it accepted it could have done more to explain and resolve the problem. 

RBS suggested I try again to make the transfer and let it know when I had done so, so it could keep an eye on things.

I tried this many more times – and each time it continued to be rejected.

The response from Shawbrook was similar. A member of the complaints team said: ‘While I do not agree we can be held accountable for the transfer issues encountered, I don’t believe we have been proactive in trying to assist you.’

Shawbrook said that for each transfer-in request that was rejected, RBS advised there was no account found. It wasn’t until 28 March when RBS explained the actual reason was the original request was outstanding.

It suggested making a manual transfer, if I still wanted to go ahead, and offered £125 compensation.

However, on 3 May RBS ‘reactivated’ my complaint after realising it might have made a mistake. It then admitted it had indeed made an error and could have processed the transfer back in August with my first request.

And on 9 May – almost nine months after I made my first transfer request – the money was finally moved! RBS offered me another £150 compensation plus £77 to make up for the interest I lost.

It’s taken so long, there’s been a number of new ISA options introduced to the market so I’m planning to move my money again. I’ve got my eye on the upcoming Trading 212 ISA – fingers crossed the transfer goes smoother this time.

Why transfer a Cash ISA?

With cash ISA rates changing all the time, you want to have the flexibility to move your money to get the best rate, if it makes a decent difference to your returns.

Our recent research shows that a quarter of savers have held the same savings account for more than 10 years. And more than one in four (27%) keep most of their money in a Cash Isa. 

The average Cash ISA rate has also increased from 1.26% to 3.33% in the past 10 years. On the average savings pot of £12,501 (according to our research), you’d earn £158 a year at the 2014 rate compared to £416 a year at today’s average rate – a difference of £258 a year.

But with the top easy-access Cash ISA – 5.1% from Chip – you’d earn £546 a year. 

If you have multiple Cash ISAs you may consider moving all the money into the highest paying account to get the rate on all of your pot.

Another reason you should transfer your ISA, rather than just withdraw it and open a new account, is so the old ISA money doesn’t eat into your current year’s allowance. 

Say you’ve paid £10,000 into your Cash ISA this tax year and have an old Cash ISA with a balance of £20,000 at a lower rate. If you withdrew the money from your old ISA and paid it into your new ISA, you’d only be allowed to deposit an additional £10,000 that tax year. But if you transferred it you’d be able to move over the entire sum and still have a £10,000 ISA allowance left.

What problems could you face transferring a Cash ISA?

You might have mess around with paperwork

If your provider is not signed up to the BACS Electronic ISA Transfer Services, you may have difficulty transferring your ISA. 

Instead of moving the money digitally, you may have to print and send off a form (which would mean a trip to the library for me!) or in some cases, you might not be able to do it at all.

For example, Cynergy Bank can only accept Cash ISA transfers from firms that subscribe to the BACS Electronic ISA Transfer Services. It does not accept paper transfer requests. 

Your new provider may not allow transfers in

Every ISA can be transferred out but not every ISA provider allows transfers in from other providers, so be sure to check. 

You might only be able to transfer the whole balance

If you’re looking to move old ISA money (from previous tax years), you can transfer some or all of it to a new provider. But for money paid in during the current tax year, you must transfer the entire balance. 

There could be penalties

If you’ve got a fixed Cash ISA you’ll likely be charged a penalty if you transfer it before the term ends. If you have an easy-access Cash ISA, you shouldn’t have to pay a fee.

If you’re thinking about making a transfer, it’s a good idea to get familiar with the different types of ISAs, before making the switch. 

Should I transfer my Cash ISA?

It’s usually a good idea if you’re going to get a better rate.

We regularly update the top ISA rates available and keep on top of new options, including the Cash ISA from Trade 212 which pays 5.2% and is coming soon.

It’s also a good idea to check the reviews of your new provider – to get a sense of how they run things and what customers think.

Check out our sister site, Smart Money People, for reviews of RBS’s Cash ISA and Shawbrook Bank’s savings.