NatWest Apologizes for Misleading Isa Transfer Advice
Bank admits customers were given incorrect information about closing fixed-rate accounts.
NatWest has apologized after a customer was wrongly advised to close a fixed-rate cash Isa and lose its tax-free status in order to transfer it. The incident, highlighted by consumer champion Sally Hamilton, involved a customer seeking to move their savings before their account matured in November 2027.
According to the report, the customer contacted NatWest in early August and was told by two bank staff members that they could not transfer the fixed-rate account before its maturity date. They were advised that their only option would be to close the account, incur a penalty, and then reinvest in a new Isa. When the customer expressed concern about losing the tax-free status of their funds, they were reportedly told it was a new ruling to prevent frequent Isa transfers.
However, upon checking government guidance, the customer found no such restriction. NatWest's online bot later confirmed that transfers were possible, although early exit penalties might apply. Sally Hamilton described the initial advice as "alarming" and "misleading," explaining that closing an Isa account before switching providers would result in the immediate loss of its tax advantages. For the customer in question, this would have meant losing the protection from future income and capital gains tax on nearly £65,000 in savings. Furthermore, closing the account would have limited new deposits to the annual Isa allowance of £20,000.
After being contacted by Hamilton, NatWest investigated the matter and confirmed that the customer had received "duff information." A spokesman for the bank stated, "We sincerely apologise for the incorrect information that was provided." To rectify the situation and compensate for the inconvenience, NatWest allowed the customer to transfer their funds to an easy-access cash Isa without penalty. This prevented the customer from incurring a three-month interest penalty, which would have amounted to £639.
The bank acknowledged that it had "fallen short of the high standards of service that we set for ourselves and that our customers rightly expect."