Three major banking groups have introduced electronic Isa transfers this week in a bid to speed up the archaic process.
Abbey, The Lloyds Banking Group (but only its Cheltenham & Gloucester, Halifax and Lloyds TSB arms) and the Royal Bank of Scotland (which also includes Natwest and Coutts) have all adopted the system.
The industry says this will finally signal the beginning of the end of the old-fashioned system where, even in the modern technology era, everything is done on paper. Isa transfers within the participating banking groups or between the trio will now be electronic.
However, critics have complained the process will still be too slow, even with the changes. Transfer times are not expected to dramatically hasten immediately, though some improvement is expected.
Paper-based transfers often lead to delays and anger amongst savers. Last year, Nationwide Building Society was forced to suspend Isa transfers because they were moving at a snail-like pace.
Banks and building societies have 30 days to transfer your cash. However, Lloyds expects its electronic transfers to take 23 days. RBS expects a 20-day turnaround.
Martin Lewis, creator of MoneySavingExpert.com, says: “In the electronic era, it’s ridiculous transfers can take this long. They should take a few days.
“Providers want you to think that once they have your money, that’s it, and you don’t have to touch it. But the money often sits there earning paltry interest and Isa transfers are the great weapon to getting better rates. More needs to be done, and quickly, to end the sloth-like process.”
The British Bankers’ Association (BBA) says it hopes that, eventually, processing times will improve. It also expects other banks to adopt the system but doesn’t say when that will happen.
If you’re transferring an Isa, remember never to take the money out yourself and move it to another financial institution or you’ll lose that year’s Isa allowance. You must approach the provider you wish to move to and ask it to formally transfer your money for you.