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Peer2Peer Finance News | September 23, 2019

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Rising number of cash ISA providers blocking IFISA transfers

Rising number of cash ISA providers blocking IFISA transfers
Marc Shoffman

INVESTORS are being prevented from transferring money from investment ISAs into some cash ISAs, with experts warning that this could result in them taking unwanted risks.

Analysis from Moneyfacts shows that there are 55 fixed-rate cash ISA products, out of 232 on the market, that will not allow transfers from stocks and shares ISAs, up from 38 in 2017. This restriction typically applies to Innovative Finance ISAs (IFISAs) as well.

Read more: One quarter of authorised managers are yet to launch an IFISA

There is nothing stopping firms from blocking ISA transfers as HMRC guidance says there is no obligation to accept transfers in, but they must allow savers to move money out to any wrapper.

Andrew Hagger, founder of comparison website Moneycomms, said this could mean savers and investors having to take extra risk in stocks and shares ISAs or IFISAs when they do not want to.

Read more: IFISA inflows set to hit £1bn milestone

“Restricting the flow of funds from stocks and shares and IFISAs isn’t what the government had in mind when it introduced simple tax-free savings,” he said.

“Limiting the choice of cash-based options for those looking to switch out of IFISAs or equity ISAs when markets are volatile could see people sticking with what they have and taking greater risk with their investment.”

Read more: Three upcoming IFISA launches to boost your tax-free savings

This article featured in the August issue of Peer2Peer Finance News, now available to read online