Watchdog tells Isa providers to clean up act

A CONSUMER watchdog is to spearhead a better deal for Isa savers after complaints that banks deliberately obstructed transfers to other banks and engaged in dirty tricks to save millions in interest each year.

The Office of Fair Trading has ruled that cash Isa transfers need to be faster, and has set a 15-day working timetable, which should save investors 5.6 million compared with the current 23-day maximum transfer delay permissible. However, the 15-day limit is a guideline rather than a firm regulation.

Consumer lobby group Which? claims there is no excuse for Isa transfers to take so long in this day and age and has demanded a full electronic transfer system to help the Isa market work for all savers.

The OFT also highlighted the need for great transparency and consistency from providers. As of 2012, all statements must include the saver's current interest rate.

Insurers face fines

THE Financial Services Authority has warned insurers they must improve their with-profits operations or face heavy fines.

Savers who have 330 billion tied up in with-profit bonds, mortgage endowments and pensions continue to receive a poor deal from their insurance companies, according to the FSA, which reviewed 17 companies that control 80 per cent of the assets held in British with-profits funds.

Two so-far unnamed firms are under further investigation for the most serious breaches.

The review found that insurers were not communicating clearly and policyholders were kept in the dark about the likely performance of their fund. The FSA also revealed that committees set up to regulate the operation were failing.

Savings rate warning

SCOTTISH investors are being warned to shop around carefully when their fixed-rate deals come to an end this year or face steep losses. More than 300,000 fixed-rate products worth over 6.9bn will mature in 2010, according to HSBC.

Best-buy rates for this type of product have typically fallen by up to 3 per cent compared with two years ago. The historically low interest rates mean Scottish savers will see a dramatic drop in their income if they do not re-invest wisely.

Summer loans sale

FIRST Direct has cut mortgage rates on five of its most popular fixed and tracker products and set all fees at 99 in its summer sale.

The reduced rates start at 2.99 per cent for a two-year fix with a 35 per cent deposit, and 2.99 per cent for an offset base rate tracker with a 25 per cent deposit.