NatWest gives incorrect Isa transfer advice

A reader contacted NatWest Bank regarding their two-year fixed rate cash Isa, which will mature in November 2027, to inquire about transferring it to another provider. The reader wanted to know the financial penalty for leaving the fixed deal early.

NatWest staff told the reader that they could not transfer a fixed-rate account before its maturity date and that their only option would be to close the account, pay the penalty, and reinvest in another Isa.

The reader was alarmed by this response, as closing the account would result in losing the tax-free Isa status of their funds. The reader looked online at the Government website and found no information that supported NatWest’s claim.

Transferring Isas

The first rule of transferring any Isa is that you never close an old account before switching, as this would result in losing the valuable tax advantages. In the reader’s case, completing a transfer form with a new provider would have allowed them to transfer the full sum already saved into the new Isa and protect any future interest earned from savings and income tax.

The reader had savings already sheltered from tax, and closing the account would have resulted in losing the tax-free Isa status of their funds.

NatWest’s Response

Thankfully, the reader did not act on the false information and instead asked the bank’s online bot for clarification, which provided sounder advice. The reader then contacted NatWest to express their concern, and the bank confirmed that the reader had been given incorrect information.

A NatWest spokesman apologized for the mistake, stating that the bank had fallen “short of the high standards of service that we set for ourselves and that our customers rightly expect.” The bank allowed the reader to transfer their funds to its easy access cash Isa with no penalties, saving them a three-month interest penalty of £639.

This incident may lead to a review of NatWest’s customer service procedures to prevent similar mistakes in the future.

In this case, the reader’s actions prevented a potentially costly mistake, and NatWest’s response demonstrates the bank’s commitment to correcting errors and providing adequate service to its customers.