Cash ISA market in OFT revamp

ISAs to be made more transparent and efficient

By Elliot Wright, 29th June 2010

ISAs will become more transparent and efficient for savers following an investigation by the Office of Fair Trading (OFT).

The cash ISA market - worth £158bn - came under fire earlier this year after consumer group Consumer Focus found the industry to be riddled with multiple layers of complexity, confusion, and delays when moving accounts - meaning savers were losing out on millions of pounds worth of interest.

The group took a 'super complaint' to the OFT who investigated the ISA market and have now announced a set of swooping measures to make ISAs fairer for savers.

The industry has agreed with the OFT to publish interest rates on the face of cash ISA statements, currently only 15% of customers receive statements showing their interest rates but from 2012 all statements will include this information.

The transfer of cash ISAs is taking too long and there is not enough transparency over interest rates.

The amount of time it takes to transfer a cash ISA has also been reduced from 23 to 15 working days, with providers being ordered to end the practice of leaving accounts in limbo for 5 days - meaning consumers won't lose out on their new interest rate while their ISA is being transferred.

Clive Maxwell, the OFT's Senior Director for Services, said: "This is an important market for the 17.5 million consumers with £143 billion of savings in cash ISAs, and also for the wider economy since those savings support lending to many households and businesses.

"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. The voluntary changes announced today will give consumers a fairer deal and drive stronger competition. We are grateful to Consumer Focus for bringing these issues to our attention."

Claims Financial