The Office of Fair Trading (OFT) has today announced a number of measures to make cash ISA transfers more transparent.
Following a 90 day investigation in response to a super-complaint from Consumer Focus, the OFT has announced a number of changes to the market, including a reduction in transfer times and greater transparency over interest rates.
From December this year, the time it takes for a cash ISA transfer to complete will be cut from 23 to 15 working days, and any provider that does not comply could face regulatory action and be forecd to compensate consumers who have lost out as a result of any delays.
And from May 2012, interest rates on the face of cash ISA statements must be published clearly; currently, only about 15 per cent of cash ISA customers receive statements that include their interest rates.
The OFT's Clive Maxwell said: "Our work over the past 90 days has revealed that, whilst there is often strong competition between providers in this market to win new savings, the transfer of cash ISAs is taking too long and there is not enough transparency over interest rates."
Michelle Slade from Moneyfacts.co.uk called the reforms "a welcome boost for savers, many of whom lost vital interest through the delays in transferring ISA money between providers," and called the fact that providers will have to highlight interest rates on statements and advise customers when bonuses end "a big step forward in improving the transparency to customers."
But many are critical that although the move is a positive one, the banks have been let off too easy.
Mike O'Connor, CBE, chief executive of Consumer Focus said he hopes the move will give banks "a sharp reminder" that their customers deserve a decent level of service, which to date, they have not been getting, but says the 15 day transfer guideline "must be a benchmark for banks to improve upon - the bare minimum and not a target."
He also expresses his disappointment that the banks have set a deadline of May 2012 for putting interest rates on statements - "consumers will be right to ask if it is reasonable to wait so long for such a basic change," he said.
Julie Smith, Investment Administration Manager at Fair Investment Company agrees, she said "I am disappointed to see that banks have got until May 2012 to comply –there is no real reason why this should be, banks should be forced to bring this simple change in sooner."
She also thinks fifteen days is still too long for ISA transfers "it should really only take a matter of days - but this is still a vast improvement on the current system."
Which? chief executive, Peter Vicary-Smith goes further still, calling for an electronic system: "In this day and age there's simply no excuse for ISA transfers to take so long. The OFT's measures are an important step towards a better deal for consumers but a fully-electronic transfer system is a must-have if the ISA market is going to work for all savers."
But according to the British Bankers Association, electronic transfer could soon be a reality. The BBA's executive director for retail banking, Eric Leenders said: "We have already started to look at ways in which the process can be made even faster, including how supporting data can be transferred electronically."
© Fair Investment Company