"Super-complaint" launched over cash ISAs
Wednesday, 31 March 2010 10:07
By myfinances.co.uk staff
The £158 billion market for cash ISAs is set to come under scrutiny after Consumer Focus launched a "super-complaint" calling on the Office of Fair Trading (OFT) to investigate its operation.
According to the organisation, around 15 million ISA holders are losing out on up to £3 billion in annual interest because of the delays in the process for transferring accounts and confusing information that makes it difficult to compare products.
Furthermore, it is calling on the OFT to look into "bait pricing", whereby providers offer "bonus" headline rates of around three per cent on ISAs that drop off after a year to around 0.5 per cent, leaving account holders with "uncompetitive long-term rates".
Consumer group Which? backed the super-complaint, with the organisation's chief executive Peter Vicary-Smith saying many customers have to endure "lengthy delays" in transferring between ISAs and seeing their interest rates "reduced by stealth".
However, the British Bankers' Association criticised Consumer Focus for making its submission to the OFT without consulting the banking sector.
It said that banks currently provide annual account summaries for all ISA holders with over £500 saved and that since 2008, the industry has been using best practice guidelines that set out timescales for managers to act during ISA transfers.
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