4 Aug 2012, 12:01am
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  • August 2012
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  • Why does it take so long to move an ISA?

    I have an ISA with iii, who jacked up their prices, in particular charging for funds and generally carrying on in a cavalier fashion. So more than a month ago I initiated a shift to TD Direct, telling both iii and TD, and filling out the relevant forms. iii at least revoked their exit charges for aggrieved customers transferring out who didn’t like the unilateral hike in fees.

    So far, the transfer still hasn’t competed, though it is within the specified time of six weeks. What the heck is the reason in this day and age for a transfer to take so long? I am transferring as stock rather than cash, but I now have an additional challenge in the form of a share certificate from one of my sharesave schemes that I want to shift into the ISA. I don’t dare put any money or stock into the TD ISA while the iii one still has anything in it, for fear of being hauled up by HMRC for double dipping. In fact all in all the process of transferring share accounts, within or without an ISA seems tediously drawn out and grief-stricken.

    I have a ESIP shareholding with Equiniti that I want to shift to TD in a non-ISA wrapper because Equiniti have outrageous selling fees that are avoided by transferring out within 90 days of vesting. However, The Firm’s shares are going XD in a few days and I’m avoiding a move over the XD period. There still seems plenty of opportunity for the transfer to make a right muddle of things between the XD and dividend payment date in a month’s time.

    What I need is a good Coffee Can

    The whole point of nominee shareholdings was to make computer transfers easier, but my experience of the ISA transfer is beginning to piss me off about holding shares in this way. If I can’t find a way to transfer the sharesave amount into my ISA I will hold the damned thing as a share certificate; it’s a large enough holding to be worth a grand a year in dividend income. The stock is good enough for Neil Woodford’s top ten which my HYP seems to have ended up being perilously similar to so it’s good enough for me as a core holding.

    Although paper is so yesterday, it has some attractions – it doesn’t mess you about to change nominee accounts and it doesn’t charge you any quarterly account fees. Account fees seem to be where nominee share accounts are going to – and I have become accustomed to not having them over the last few years. Guess I was freeloading on all the guys holding active funds, and this cross-subsidy is being banned by the Retail Distribution Review, which as an unforeseen consequence is going to shift the balance from electronic to paper for long term holdings. For a share that I’m going to sit on for a while as I build up my HYP ISA around it to get my sector allocation back into line there’s much to be said for paper. What I now need is a good can to stash these in, as described by Robert Kirby in his 1984 article ‘the Coffee Can portfolio” – basically stick share certificates in can, collect £1500 a year tax – free (when the second sharesave comes out in December to join this one) and forget about the tin. He said in 1984

    You can make more money being  passively active than actively passive

    Something the III experience has shown me is I want some diversity in nominee providers, and having no nominee for a significant holding is one step towards that. That way if I fall out with a nominee provider I don’t end up with my entire income stream held up to ransom. This isn’t easy with small accounts of < £10k each because you often get tapped with account fees below a certain size (with TD it seems to be £7500), and ISAs in particular are a pain to have spread around. However, I’m out of that limitation now, and after next year I will probably leave my HYP as it is and switch future years contributions to some sort of Vanguard lifestrategy fund if RDR hasn’t made funds expensive to hold. That will probably necessitate starting up with a different ISA provider to get access to the Vanguard fund.

     

     
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