Thousands of Nationwide savers have been left waiting months to transfer money into its market-leading Isa after ‘unprecedented demand’ for the tax-free deal led to a huge backlog at Britain’s largest building society.
Just under 3,500 savers are still waiting for old Isas to be transferred into its 18-month tax-free account paying 0.75 per cent, half of whom put transfer requests in during March and April.
Britain’s biggest mutual unveiled the account, open only to existing customers, in mid-March.
Thousands of Nationwide Building Society savers have been waiting since March for their Isas to transfer into its top-rate savings deal unveiled in the midst of Isa season
Already the best available rate on an Isa with a term of less than three years, the account also came with a £50 bonus for those transferring in £10,000 or more from an old account.
The bonus meant the total return was bumped up to closer to 1.1 per cent, which would usually require fixing for half-a-decade to attain.
Starved by ultra-low Isa rates available elsewhere, thousands of Nationwide customers opted for it, with a quarter-of-a-million people applying for the account and other competitive deals, according to the building society.
However, that surge in demand appears to have caught Nationwide by surprise, with the backlog of transfer requests taking months to sort through as customers tried to nab the bonus.
Cash Isa transfers are supposed to take just 15 working days, according to government guidelines.
Although the building society is sorting through the backlog, with the 3,500 outstanding transfers down from 4,000 a few days ago, some have still been waiting close to three months, leaving them temporarily out of pocket.
Nationwide said: ‘The vast majority of members have had their Isa transferred to Nationwide within the 15-day target.
‘However, due to increased volumes, there were some Isa transfer applications which have taken longer to process than normal.
‘Although the vast majority of these transfers have been completed, there remain a small number outstanding which we are processing as quickly as possible – these are often where we are awaiting additional information.’
While up to £20,000 can be saved into a tax-free Isa each financial year, previous years’ balances can usually be transferred into newly opened accounts. However, this is not always the case, while some Isa providers can charge a fee.
Some £48.7billion was saved into cash Isas in 2019-20, a four-year high, according to the latest figures from the taxman, bringing the total value of tax-free savings to £316.2billion.
However, ultra-low interest rates over the last 12 months means that after accounting for inflation, savers saw £540million wiped off the value of those savings.
And given average Isa rates have been just 0.4 per cent since last November, according to the Bank of England, it is no wonder so many opted for a top-rate savings deal like Nationwide’s when it became available.
The building society said no interest would be lost due to the transfer delays, as interest is paid from the day an Isa application is received.
It added: ‘Anyone transferring to the society will receive interest from both their old provider and Nationwide while the transfer takes place. The same goes for the £50 Isa transfer incentive – all those meeting the criteria for that will receive it.’
