Alliance + Leicester ISA exit fee

Mike wrote on Fri, 27 May 2005

Isn't it the case that para 5.5 actually says "an exit charge, as detailed in our Tariff for Additional Services, may be payable."?

It took me a couple of minutes to find the Tariffs file which includes mention of the GBP25 charge. But even if it had not been on-line, I think they've done enough by drawing the Tariff's existence to your attention in para 5.5; or indeed, just by implying that they reserved the power to charge an exit fee.

Thankyou for your response.

IMO the Tariff's existence has nothing to do with my argument. It's only there to say that this is how much they will charge if they decide to cahrge it. It's clarifying what they will charge, but not when they will charge it.

Lets's look at my argument from a different perspective. What if, in their T

• C's they inserted the words 'MUST', 'IS' or 'WILL' be payable instead of the word 'MAY' be payable. From that point of view there would be no doubt that the exit fee would have to be paid. But the word 'MAY' does not have the same clout. It implies that there maybe certain circumstances when the exit fee does not have to be paid. Sure, they reserve the right to charge the exit fee, but when and for what reason? They don't state the when and for what reason in their T+C's. So when I come to transfer my money out from A+L, how will I know that the circumstances under which I am transferring my money are indeed the circumstances in which I will get charged. If they don't state the reason for charging me the exit fee (because remember the word 'MAY' by implication implies that there are circumstances where the charge is not payable), then how can they justify the basis for charging me the exit fee.

FYI, in my email exchange with A+L, I have challenged them to be able to uphold the definition of the word 'MAY' in a court of law to mean that this exit fee has to be paid in all situations regardless of the circumstances.(which incidentally I believe the word 'MUST' be payable would give them the clout to do this ie. payable in all situations regardless of the circumstances). If they can't do that, then by inference then, they cannot charge the fee all of the time. If they don't charge the fee all the time, then what are the circumstances when they don't charge the fee. I would like to know this as I'm trying to find out the circumstances under whuh I can transfer my money without being charged an exit fee, which the word 'MAY' (and not 'WILL', MUST' or 'IS') implies that I can do.

Is this just a crackpot argument or do I have something here.

Mike

Yes, but surely the OP's point is that by saying they *may* charge one, they are implying that they also *may* not, while failing to specify *when* they may or may not - in which case, he cannot take steps to avoid being hit with it.

It sounds like a not-bad argument to me but the trouble is they may argue that he should have had this argument before giving them any of his wedge. Having done so, he has perhaps tacitly accepted that they can help themselves to 25 as it suits them.

Unless you have a lot of dosh in their ISA, this 25, if considered as a reduction in the interest rate, is enough to turn their interest rate from one of the best into one of the worst, which was why I put my ISA dosh elsewhere this year.

Grammatically, I would say you're right.

You should post this on the

forum, where it might get the attention of Martin Lewis who tends to scrutinize T&Cs for such loopholes.

"John Redman" wrote

Surely the "circumstances" could simply be 'whenever a redemption fee is shown on the Tariff' ?

Sounds like sound advice to me. I'm going to transfer this question over to

and see what happens. See you over there.

Mike

I forgot to say thankyou for all your responses. I think it shows that I may have something here but there again who knows.

Mike

Does any other bank charge a fee when an ISA is transferred elsewhere? What might the Banking Ombudsman's view of such a fee be, I wonder? It is maybe reasonable that A & L might charge that fee if a transfer is sought simply because, say, someone else comes up with the offer of a higher rate but if A & L reduce their interest rate (or change any other condition) there's surely a good case for demanding that no transfer fee shall be charged. Perhaps it's with those circs. in mind that *may* has been used.

What's reasonable about that?!? It's only natural that people move their money to a higher interest account. An ISA is a savings account like any other. The only difference is that that a lot of banks try to make it difficult to transfer ISAs or in some cases even tell their customers that it isn't possible.

You didn't quote me fully. I wrote:

It is maybe reasonable that A & L might charge that fee if a transfer is sought simply because, say, someone else comes up with the offer of a higher rate but if A & L reduce their interest rate (or change any other condition) there's surely a good case for demanding that no transfer fee shall be charged. Perhaps it's with those circs. in mind that may has been used.

Whilst I feel that the introduction of transfer fees for this type of account is regrettable I feel that it is not unreasonable if punters have been told of such before they opened the account. If, however, having captured a large number of investors they were to reduce their interest rate at a time when there was no reduction in Bank Rate it would be unreasonable to impose the charge. As I implied earlier, I would hope that the Banking Ombudsman would have something to say in those circs.

It is always possible to transfer out. Some banks don't accept transfers in for policy reasons.

Peter Crosland

In message , DB. writes

Loads do.

Its not a problem.

In message , Elizabeth Smith writes

No its not 'like any other' at all. To transfer an ISA form one provider to another needs quite a bit of extra admin, including advising the Inland Revenue etc.,

I know. But a few weeks ago someone started a thread here because he was told by both involved banks that it wasn't possible.

I used to work in a retail bank outside of the UK, where we had T&Cs that frequently would refer to other publications by the bank.

Something along the lines of

"We may charge a fee for transferring your holdings if our current price list says so."

The point being that it saves the bank a lot of work (and the consumer benefits from lower costs. Well ideally anyway) because they don't have to constantly review (and update) multiple sets of legal documents.

If this is indeed the case I doubt that the muppets in customer service will be aware of the situation, and simply not enter into discussions with a 'difficult' customer..

Now, of course, I fully take your point about the transfer charge reducing your return substantially in percentage terms if you have a small holding.

Perhaps the morale is that A&L is trying to attract business from wealthy people as opposed to us normal with only a bit of money to spare...

Thanks alot to everybody who responded to my query. I got the impressiion (not only from this forum but others as well) that people had different interpretations of what A+L should or could charge.

Anyway, for those interested, here's the latest reply that I received from A+L which I believe echos some of the responses above. I was going to pursue this one, but now I'll put it to rest.

'As clarified to you previously the use of the word 'May' implies that there could be a charge and indeed it has also been clarified that our Terms and Conditions referred to our Tariff of Charges where is explains that there is indeed a charge.

The word 'May' is used as there are circumstances a charge is not incurred, such as during the term of a Fixed Rate ISA (where an interest rate penalty would be applied rather than a charge). It also allows us to remove the charge if we so wish without having to rewrite the Terms and Conditions.

The use of the word 'May' is acceptable in a court of law as we clarify where the information is contained as to whether a charge exists or not.'

So there you are. Ta ra.