Money Insider: Halifax sets pace with ISA standards

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The Independent Online

little more than a week after launching a new table-topping best-buy ISA, Halifax followed up with a raft of promises to improve the much-maligned ISA transfer service.

With effect from 2 October, Halifax is pledging to make best-buy ISA rates available to new and existing customers, to increase the visibility of interest rate information on ISA statements and promising to notify customers in advance of any initial or bonus rate that is due to end.

However, the most radical of the proposal from Halifax is that it will in future pay interest from the date a completed ISA transfer application is received.

This will prevent savers losing the benefit of a better interest rate due to administrative delays which have blighted the transfer process and deterred consumers from transferring their money.

Improving the switching between banks is a key step if we are to have any chance of maintaining consumer confidence in tax-free savings, particularly when rates are so poor. All consumers are asking for is a straightforward and painless way to move their money between providers – surely that's not asking too much with the wealth of technology available to the financial services industry.

Halifax's decision to grasp the nettle and agree to pay interest on ISA transfers from the moment it receives a signed ISA transfer application should be applauded. It has set the benchmark with this shake-up and others will surely be forced follow their lead or risk losing competitive advantage.

ISA interest delays become more important to consumers with each year that passes, especially those who have been maximising their tax-free allowance and may have amassed a capital sum of more than £40,000. A 15-day delay on such a balance at 3 per cent could see them miss out on almost £50 in lost interest.

There has been precious little for savers to smile about in the past 18 months, with rates hitting rock bottom and inflation more than wiping out the value of their meagre returns, but industry-driven initiatives such as this will help restore savers' faith in providers .

For the ISA scheme to continue to grow year on year, it needs support from both the banks and the Government to remove confusion and red tape and offer consumers a fair deal and absolute transparency.

Savings news

This week saw a flurry of activity in the shortterm fixed-savings market. Current table-toppers for a one-year term, Northern Rock, is now having to share number one spot with First Direct, HSBC and Sainsbury's Finance, all offering 12-month bonds paying fixed 3 per cent gross.

Even though this is the top rate, it's still possible to get 2.85 per cent gross on instant-access savings from NatWest e-Savings, so the extra rate you receive for locking your cash away for 12 months at the moment is negligible.

For longer-term fixed savings, this week saw the long-standing table-topper from ICICI Bank UK cut its rate from 4.75 per cent to 4.50 per cent gross on its five-year bond, leaving Birmingham Midshires top at 4.60 per cent gross.

Fixed rate attractions to lure buyers

the latest Moneynet analysis shows that demand for fixed rate mortgages remains solid as borrowers continue to seek long-term security.

There are plenty of products to choose from no matter what size deposit you have. This week Yorkshire Building Society launched a best buy five-year fixed rate mortgage at just 3.89 per cent (60 per cent LTV) and £995 fee or, for those with a 25 per cent deposit, a rate of 3.99 per cent, again with a £995 fee.

If you're comfortable with a variable rate mortgage then deals from Norwich and Peterborough Building Society are worth a look. There is a discounted two-year product at 2.95 per cent (SVR minus 2.40 per cent) with a £995 fee available for loans right up to 85 per cent LTV. A five-year option is available at 3.95 per cent (SVR minus 1.40 per cent) with a reduced £395 fee and available to 80 per cent LTV.

Andrew Hagger is a money analyst at

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