Today is the last day of the tax year, here in the UK, which means it’s traditionally the end of a crazy month of competition in the Individual Savings Account (ISA) market. For those who are outside the UK (or even in the UK, but perhaps not well versed in financial services), an ISA is a savings account which does not attract any tax on interest paid, within certain limits.

With interest rates at a all-time low here (currently, the Bank of England base rate is just 0.5%, and typical savings rates are below that) it was worth shopping around for a decent Cash ISA. Santander’s Flexible Cash ISA was leading the market for instant-access ISAs at 2.8% above bank base rate, fixed until 2012 so, a few weeks ago I opened an account online, ignoring the reports of poor customer service because this is an infrequently-accessed savings account, not my current account. After waiting for the usual letters to arrive with various registration details, I finally negotiated the mess that is online “security”, logging on to my account with an arcane mix of personal IDs, passcodes and registration numbers. Quite why banks insist on this incomprehensible mess of identifiers (which only get written down somewhere…) is anyone’s guess – if a securID token is fine for staff accessing their systems remotely, I have to wonder why they can’t do something similar for retail customers but, to be fair, I’ve seen worse (ING Direct) and my bank (First Direct) is no better.

After logging on (and ignoring the option to install some additional Trusteer Rapport software to further bog down my system) I saw an option to “Pay Money In” so, naturally, I thought this would be a good way to transfer some money into my account… oh, silly me…

I supplied the details that the website requested (source sort code and account number, together with the amount of money to transfer) and it issued a receipt, including confirmation that:

“Assuming the funds are available, they will be credited to your account within five days and will be availabel for withdrawal a further two working days later.”

Great. Except that, despite receipting the transaction, Santander didn’t actually take any action on it. I checked six days later and found that the money had not left the source account. Wondering what was happening, I called a number for “general banking enquiries” from Santander’s “Contact us” web page. That was the wrong number – apparently I needed to speak to the Personal Banking team on a different number… still, at least the call centre was in the UK.

I spoke to a helpful chap called “Paul”, who told me that he’d never heard of this option in Santander’s online banking pages and that I couldn’t transfer money into the account using Santander’s systems – I’d need to send it from the source bank.  With just two working days to the end of the tax year, I asked if Santander accepts Faster Payments and he said that, even though he can’t tell me what the limits are “for security reasons” (10 seconds on the Internet tells me that Santander’s current limit for outgoing payments is £300 but there is no figure listed for incoming transactions), my payment of £5100 would be too high and when I said that my bank would let me send up to £10,000 through the Faster Payments system he told me that was “illegal”! Hmm… I wasn’t convinced.

Instead, “Paul” suggested that I use the CHAPS system for a telegraphic transfer into my ISA and that he would credit my account with £25 to cover the fee that my bank will charge for this. I agreed to this, and called my bank to set up the transfer for £5075 (£5100 minus £25 – as there are strict limits on the amount of money that can be paid into an ISA).

After checking that transaction had indeed taken place, I found that there was no £25 credit to my ISA, only the money I had transferred via CHAPS, so I called Santander again and spoke to another helpful, but clueless, chap called “James”.  He told me that a cheque would be issued for the £25 charge but that Santander couldn’t pay this into my account “for tax reasons”.  Nonsense. With one day left until the end of the tax year, and no practical method to use my full ISA subscription now (not to mention the wasted time spent on the phone), he said he could send me another £25 cheque but I wont be using my full ISA limit for 2010/11.

I can only assume that Santander’s staff are either:

• Inept.
• Really badly trained.
• Will tell customers anything to get them off the phone and move on to the next call.

I’ll let you draw your own conclusions as to which, or for Santander to respond – which they won’t, because they don’t appear to use social media – but if you’re looking for a market leading ISA (or indeed any retail banking product), my advice is to steer clear of Santander.

[Updated 6 April 2011: I’ve still not received the cheques from Santander, but I did manage to pay some money into the account in a Santander branch yesterday – I wonder why no-one in the call centre suggested this?]
[Updated 7 April 2011: Yesterday, I received a letter from Santander, dated 29 March – so 8 days old – advising me that they couldn’t carry out my transaction because there is no direct debit in place between the two accounts. Fair enough, but that doesn’t excuse the call centre’s inability to advise me of this, or the website accepting the transaction even though the supporting account links did not exist!]
[Updated 8 April 2011: Another letter from Santander, dated 4 April and advising me of a £25 credit into my account which didn’t actually take place.]
[Updated 12 April 2011: Received a cheque from Santander for £25 – although it’s unclear if this is as a result of my call on 2 April, or on 4 April (the letter is dated 6 April – 2 days after my most recent call) – I’m still expecting another £25 as I was promised two credits – one to cover my CHAPS fees and one for the inconvenience that Santander caused me]