Maturing Tessa Account Survey

Moneybox surveyed a selection of high street banks and building societies about options and deadlines for customers with maturing tessas. Their responses are listed below but we do advise that you contact your tessa provider regarding your individual circumstances.

Banks
Abbey National
Barclays
Bradford & Bingley
Halifax
HSBC
Lloyds/TSB
NatWest

Building Societies
Britannia
Leeds & Holbeck
Nationwide
Portman
Yorkshire

Abbey National

How many Tessa accounts will you have maturing from 2001 ?
Abbey National will have over quarter of a million TESSA accounts maturing in 2001.

What is the total value of your Tessa accounts maturing from 2001 ?
These accounts have an approximate value of £2.1 billion.

If customers do not immediately move/take out maturing funds what will happen to the money ?
We write to all customers with a maturing TESSA around 3 weeks before their TESSA comes to an end, asking what they would do with their money when their TESSA matures. If we have not heard from them by the time of maturity we are required by law to close their TESSA and default their money into an alternative account - a 'default' account. The default account is the Investor 30 account. The interest rate for £5,000-£9,999 is 2.00% and for £10,000 - £24,999 is 2.75%.

There are two criteria which this default account must meet:

1. It must have similar access channels to the original TESSA account (as all Abbey National TESSAs are branch based, our default account must therefore be branch based). 2. It must allow the customer instant access to their money should they require it.

Abbey National default our matured TESSAs into the account we have that pays the highest rate of interest whilst meeting these two criteria.

We urge customers not to default by encouraging them to make their decisions prior to their TESSA maturity. As well as writing to all customers, our branches pro-actively contact these customers to ensure they are aware of the options available to them.

Is there a deadline by which customers must move/take out matured fund ?
Yes. The customer must let us know what they want to do with their money by the day prior to the date of maturity. They can do this either by returning the options form in their maturity pack, or by calling into their local branch.

If customers do not comply with the deadline what will happen to their money?
See answer to question 3

If customers want to re-invest matured funds what will you recommend ?
We would strongly recommend that the TESSA capital (money originally invested by the customer) is invested in a TOISA (TESSA-only ISA). This is the only place where a customer can continue to invest this money tax free without affecting their normal annual ISA limits.

As a TOISA can only be opened within 6 months of the TESSA maturing, we would also recommend that customers act quickly so that they don't miss out on this valuable tax-free benefit.

Because you can't invest the interest earned on a TESSA into a TOISA, this money could also be used to invest elsewhere. If a customer has not already maximised their annual ISA allowance, this money could be used to open, or top-up, an ISA - maximising the customers tax free benefits.

Abbey National has also set up two special accounts only for Abbey National customers with maturing TESSAs. These are:

Two Guaranteed Growth Accounts launched only for Abbey National Tessa customers. Both are fixed term and fixed rate.

a) 3yr with guaranteed 20% return on capital
b) 5yr with guaranteed 35% return on capital

Barclays

How many Tessa accounts will you have maturing from 2001? We do not issue these figures as they are commercially sensitive.

What is the total value of your Tessa accounts maturing from 2001? We do not issue these figures as they are commercially sensitive.

If customers do not immediately move/take out maturing funds what will happen to the money?
1 month prior to maturity we write to customers and provide general information about the options available to customers, including the general benefits of ISAs (Maxis and Minis) including the opportunity of investing TESSA capital in to an ISA and we provide specific information regarding Barclays Mini Cash and TESSA only ISAs.

If we do not receive a response from customers, a further letter is sent 2 weeks prior to Tessa maturity.

If the customer wishes to invest in a Barclays Mini Cash or TESSA Only ISA we do not need to issue a maturity certificate as we are moving the balance to another Barclays account.

Inland Revenue regulations require a signed application for TESSA capital to be invested in an ISA, therefore if no customer response is received we transfer the money on the date of maturity to a Barclays Instant Savings Account held centrally at our TESSA office. The account is held centrally for security purposes - given that it may be up to 5 years since the deposit to the ISA, we require signed written instructions from the TESSA customer before we will release funds. The customer interest rate will depend on the balance of the maturing TESSA (rates are as per Barclays Instant Savings Account).

Is there a deadline by which customers must move/take out matured fund ?
There is no deadline for customers imposed by Barclays, however customers are made aware that they have only 6 months from the date the TESSA matures to invest matured TESSA capital in to the cash component of an ISA.

If no customer response is received we transfer the money on the date of maturity to a Barclays Instant Savings Account held centrally at our TESSA office. Interest rates are tiered as follows:

£100 - £499: 1.5% gross
£500 - £4,999: 2.3% gross
£5,000 - £9,999: 2.4% gross
£10,000 or over: 2.5% gross

If customers want to re-invest matured funds what will you recommend ?
Because each customer's circumstances will be different we would not make recommendations to customers. However, we do provide factual information about ISAs and the opportunity to invest matured TESSA capital in to the cash component of an ISA in addition to the standard annual limits and that customers have only 6 months from the date the TESSA matures to take advantage of this opportunity.

Bradford & Bingley

How many Tessa accounts will you have maturing from 2001 ?
93,000

What is the total value of your Tessa accounts maturing from 2001 ?
1 billion

If customers do not immediately move/take out maturing funds what will happen to the money ?
Matured funds will be held as an instant access account with an interest rate of 3.6%

If customers want to re-invest matured funds what will you recommend ?
Bradford & Bingley have 3 Tessa Only ISA funds: A variable rate account with 6.5% interest (falling to 6.4% for accounts opened mid January or later); A fixed rate, fixed term account with an interest rate of 6.25%; A fixed rate, fixed term variable account with an interest rate of 6.75%.

Halifax

How many Tessa accounts will you have maturing from 2001 ?
Around 50% of our Tessa accounts will mature in the first quarter of this year.

What is the total value of your Tessa accounts maturing from 2001 ?
This is confidential.

If customers do not immediately move/take out maturing funds what will happen to the money ?
For our Tessa customers, we write to them six weeks before their Tessa matures with a maturity pack. This pack gives them details about their Tessa, options to consider for their matured funds and a form to complete and return to us with their instructions.

If this form is not returned to us within a few weeks we contact the customer by phone for their maturity instructions. If for any reason the customer cannot be contacted and we do not receive their instructions before their Tessa matures their funds are moved into a matured Tessa account (paying 5.25% gross). The funds will stay in this account until either the customer provides us with their maturity instructions or for six months, whichever is the sooner.

Is there a deadline by which customers must move/take out matured fund ?
Tessa funds can stay in the matured funds account for a maximum of six months. The Inland Revenue rules allow Tessa capital to be transferred to an ISA within six months of the Tessa maturing.

If customers do not comply with the deadline what will happen to their money?
If no instructions have been received from the customer at the end of this six month period, their funds are transferred into our Liquid Gold account with an interest rate of 2% on investments over £500. These details are given in the maturity pack.

If customers want to re-invest matured funds what will you recommend ?
Customers with maturing Tessas might want to take maximum advantage of their tax free investment limits and so an ISA would be the main option, particularly for their Tessa capital.

Halifax's mini cash ISA product, Halifax ISA Saver, can be used to invest up to £3,000 in the current tax year and customers can also use it to invest capital from a maturing Tessa (this does not count towards the customer's annual ISA limit). If only Tessa capital is put into the account then it is a Tessa only ISA - but if customers use the account to invest both their Tessa capital and their annual ISA allowance it is a mini cash ISA. The interest rates on Halifax ISA Saver are as follows:

£1+ : 5.00% gross
£1,000+ : 6.00% gross
£3,000+ : 6.40% gross
£6,000+ : 6.60% gross
£15,000+ : 6.75% gross

HSBC

How many Tessa accounts will you have maturing from 2001?
Over 100,000

What is the total value of your Tessa accounts maturing from 2001? Over £450m

If customers do not immediately move/take out maturing funds what will happen to the money
We try to contact every customer before maturity to establish what they wish to do with their maturing TESSA. If we do not get a response the funds are moved on maturity to an instant access account so that they continue to receive interest but are free to use the money as they want. The customer will be notified of this and reminded that they have six months to reinvest the capital tax free.

Is there a deadline by which customers must move/take out matured funds?
The only deadline is the Inland Revenue requirement that customers reinvest TESSA capital in a TESSA only ISA within six months of the TESSA maturing.

If customers do not comply with the deadline what will happen to their money?
The extra tax-free allowance for TESSA capital will be lost.

If customers want to re-invest matured funds what will you recommend?
This will depend on the individual customer's circumstances. If the customer requires instant access we would recommend a TESSA only Cash ISA. HSBC currently offer up to 6.75% AER.

If the customer is in a position to tie up funds for five years and is interested in stock market investment with the capital security of a cash deposit, we would suggest the HSBC Performance Plus ISA. This offers 100% participation in the growth of the FTSE 100 Index with a maximum 60% return over 5 years (a 9.86% AER tax free). This product has been developed specifically for maturing TESSAs.

Lloyds/TSB

How many Tessa accounts will you have maturing from 2001 ?
Market sensitive information.

What is the total value of your Tessa accounts maturing from 2001 ?
Market sensitive information.

If customers do not immediately move/take out maturing funds what will happen to the money?
We write to all customers just before their TESSA matures, asking them what they want to do with the funds.

On maturity, we will follow any instructions the customer has given us - e.g. 1) to open a TESSA ISA and transfer the capital into it, 2) to send them a cheque for the balance, or 3) to pay the balance to an account the customer has nominated (either at maturity or when the TESSA was opened).

If no instructions are received from the customer before maturity, the TESSA will either 1) mature into an instant access Flexible Savings Account, or 2) a cheque for the balance will be sent to the customer at his/her last known address. Which route is taken depends on the terms and conditions of the specific TESSA account.

Is there a deadline by which customers must move/take out matured fund?
The TESSA will always have to close on maturity. We strongly recommend that customers seek advice on how to reinvest their maturing funds. If customers wish to retain the right to earn tax-free interest on the capital, we would strongly advise them to reinvest their capital into a TESSA ISA at the earliest possible point. Inland Revenue rules require customers to reinvest the capital in a TESSA ISA within 6 months, if they want to do so at all.

If customers do not comply with the deadline what will happen to their money?
If the TESSA has been converted into a Flexible Savings Account on maturity, the money will remain there and earn interest. However, our branches are asked to contact customers again in order to ascertain what they wish to do with the funds.

If customers want to re-invest matured funds what will you recommend ?
Customers' individual circumstances vary, and therefore it is not possible to give a single recommendation. However, the Lloyds TSB TESSA ISA is designed specifically as a home for capital from a matured TESSA (when appropriate), and allows the customer to continue to earn interest tax-free. Any holdings in a TESSA ISA are ring-fenced and do not affect a customer's eligibility for the Mini or Maxi ISA.

NatWest

We write to customers with maturing TESSAs approximately 5 weeks prior to maturity, reminding them that their TESSA is due to mature and detailing the options which are available to them. We also ask customers to provide us with their instructions for the matured funds. We contact customers again shortly before maturity by way of a second reminder.

We have recently launched a TESSA only ISA and information on this account and other ISAs is provided in the initial mailing.

If we do not receive instructions prior to maturity, the funds are placed in a savings account which provides instant access. After maturity, we will again write to those customers who have not provided us with specific instructions to inform them of the interest rates they are receiving and again request instructions for their matured funds.

Customers have 6 months from the date of maturity in which to invest their matured TESSA capital in an ISA without affecting their normal subscription limits."

Britannia

How many Tessa accounts will you have maturing from 2001 ?
A. This is information we don't release

What is the total value of your Tessa accounts maturing from 2001 ?
A. This is information we don't release

If customers do not immediately move/take out maturing funds what will happen to the money ?
A letter is sent to the customer 2 months prior to the maturity date. This gives them a variety of options - either to reinvest their capital into a maturity TESSA product, or make the cheque payable to whomever be it either themselves or a third party. Alternatively they can have the funds transferred into another account. They would tick the appropriate box and sign and date the form and send it back to Britannia.

If Britannia has not heard back from the customer a second letter is sent to them 2 weeks prior to maturity and urging them to make their choice, whilst outlining what the next step is if they don't make a choice.

Upon the date of maturity, if the customer has not made a decision the funds are moved into a holding account which is an instant access account.

If Britannia has still not had a response by the 5th month, we write a letter again, outlining that they only have one more month in which under the Inland Revenue rules, they can move their funds into a tax free account.

Is there a deadline by which customers must move/take out matured fund ?

Yes, 6 months after maturity date to receive further tax free investment, under the Inland Revenue rules.

If customers do not comply with the deadline what will happen to their money?

They will remain in the instant access account.

If customers want to re-invest matured funds what will you recommend ?

Britannia's Instant Access TESSA Only ISA or the 5 year TESSA Only ISA for the capital and a new ISA for the interest. Depending on the type of customer and their needs either a MINI or MAXI ISA.

Leeds & Holbeck

How many Tessa accounts will you have maturing from 2001 ?
16,118

What is the total value of your Tessa accounts maturing from 2001 ?
£159.7 million

If customers do not immediately move/take out maturing funds what will happen to the money ?
It moves into Loyalty Instant Gold (instant access; 5.4% including 1% bonus for six months, then 4.4%)

Is there a deadline by which customers must move/take out matured fund ?
To maintain tax free status Inland Revenue rules require it to be re-invested within six months

If customers do not comply with the deadline what will happen to their money?
It remains in Loyalty Instant Gold, with instant access and therefore option to move to another account of their choice

If customers want to re-invest matured funds what will you recommend ?
Four products on offer

For existing members of three years or more only

Loyalty TESSA ISA (6.7% variable; instant access, minimum balance £1; can be opened with all or any of maturing TESSA capital)

Loyalty 2 year Fixed Rate TESSA ISA (7% including 0.75% bonus for six months; then 6.25% for eighteen months; minimum investment £1; can be opened with all or any of maturing TESSA capital; no withdrawals; closure of account subject to 90 days' loss of interest)

For members transferring to Leeds & Holbeck and existing members of less than three years

FTSE TESSA ISA (27.5% guaranteed so long as FTSE 100 rises during the three year term from 21 February 2001; money-back guarantee if FTSE 100 falls or stays the same; minimum investment £100; matured TESSA capital invested before 20 February continues to earn the relevant TESSA rate until close of 20 February; no withdrawals; 14 day 'cooling off' period)

TESSA ISA (6.55% variable; instant access; minimum balance £1; can be opened with any or all of maturing TESSA capital)

Nationwide

How many TESSA accounts will you have maturing from 2001?
We are not able to disclose this information.

What is the total value of your TESSA accounts maturing from 2001?
We are not able to disclose this information.

If customers do not immediately move/take out maturing funds what will happen to the money?
Upon maturity Nationwide TESSAs automatically convert into a savings account which offers unlimited free access for 6 months. Both the capital and the interest from the matured TESSA will remain in this account until further instructions are received by Nationwide.

Is there a deadline by which customers must move/take out matured fund?
The Inland Revenue has set the deadline regarding the re-investment of TESSA monies. Members must re-invest their matured TESSA capital within 6 months if they wish to retain the tax-free status of these savings.

If customers do not comply with the deadline what will happen to their money?
Once the 6 months has elapsed the member will lose their right to invest their TESSA capital in a Tessa Maturity ISA product. The matured TESSA funds can remain in the savings account (mentioned above) after the 6 months have elapsed, although full terms and conditions will apply from this time.

We try to do all we can to ensure that the member is aware of the Inland Revenue's 6-month deadline. If we have not heard from the member 3 months after the TESSA has matured we write to them to remind them of the 6-month time limit and ask them to contact us to discuss their options for re-investment.

If customers want to re-invest matured funds what will you recommend?
We write to all our TESSA holders 6 weeks before the account matures to remind them of the maturity date, give them an estimated maturity value and explain the re-investment options open to them. We give full details of the options available to them for re-investing both their TESSA capital and interest.

For the capital of the matured TESSA we offer two Tessa Maturity ISA products: a Tessa Maturity ISA which allows unlimited withdrawals and pays an interest rate of 6.55% gross p.a. or a Tessa Maturity ISA Bond which offers a rate of 7.00% gross p.a.

We also enclose details on a range of savings accounts, which may be suitable for the TESSA interest.

We will write to each member again on the day of maturity and finally, if we have not received any instructions we will write again 3 months after maturity of their TESSA.

Portman

How many Tessa accounts will you have maturing from 2001?
Sorry, we see this as business sensitive information.

What is the total value of your Tessa accounts maturing from 2001 ?
Sorry, we see this as business sensitive information.

If customers do not immediately move/take out maturing funds what will happen to the money?
The account will automatically transfer to the Portman Instant Access Account. This currently pays 4.65% gross pa on balance above £1,000 and 4.15% gross pa from £100. Interest on this account will not be paid tax-free (unless the customer is a non-tax payer and registers a R85). This account offers Instant Access and withdrawals are penalty-free.

The Society began a rolling programme of mailings, towards the end of December, to customers with maturing TESSAs. This programme is continuing and the mailing pack sent gives customers details of the options available to them and quotes a dedicated Customer Services telephone number.

Is there a deadline by which customers must move/take out matured funds? No, the balance will remain in a Portman Instant Access Account. Of course, if they want to re-invest the TESSA capital in a TESSA Only ISA then they have six months in which to do so.

If customers do not comply with the deadline what will happen to their money?
See above.

If customers want to re-invest matured funds what will you recommend ?
Customers may choose to see a Portman Financial Services Consultant to review their financial affairs.

We believe our TESSA Only ISA 45, which has a variable rate of 7.30% is an excellent product for those who want to re-invest their TESSA capital in a tax-free savings product, as this will not impact on their ordinary ISA allowance for further tax-free savings.

The minimum investment in the TESSA Only ISA 45 is £1,000 (of matured TESSA capital) and the maximum £9,000. 45 days notice or loss of interest is required for withdrawals. On 2 October 2001 the account will transfer to the Easy Access TESSA Only ISA, which currently pays a variable rate of 6.00% and offers instant access.

If a customer has not taken advantage of their ISA allowance during this tax year, the interest accumulated on a Portman TESSA could be invested in a Portman Members ISA 45 (minimum investment £1,000 maximum £3,000). Interest is 6.40% variable, tax-free, for investments of £1,000 - £2,999. The interest rate is 6.65% variable, tax-free, for an investment of £3,000.

The Members ISA 45 account requires 45 days notice or loss of interest for withdrawals. On 2 October 2001 the account will transfer to the Easy Access ISA, which currently pays 6.00% tax-free and offers instant access.

The Members ISA 45 account is available to members of the Society who had an open mortgage or investment account with the Society prior to 18 December 2000.

Yorkshire

How many Tessa accounts will you have maturing in 2001?
Not available.

What is the total value of Tessa accounts maturing in 2001?
Not available.

If customers do not immediately move/take out maturing funds what will happen to the money?
Funds are transferred into an Access Saver Account (1 no notice w/d pcm, paying 4.90% gross/AER (wef 7/1/01)) on maturity.

Is there a deadline by which customers must move/take out matured funds?
Inland Revenue ISA ruling gives maturing TESSA holders 6 months from maturity to invest their capital (excluding interest) tax-free in a TESSA Only ISA.

The Investor also has the option to invest all or part of the funds in another YBS account or request a cheque for all or part of the matured funds. There is no deadline for either of these options.

If the customer does not comply with the deadline what will happen to their money? The customer cannot invest the matured capital from their TESSA in a TESSA Only ISA from any provider if the TESSA matured more than 6 months ago (Inland Revenue regulations)

If customers want to re-invest matured funds what will you recommend?
We offer the customer 4 options

1. To reinvest all or some of the capital (excluding interest) in a TESSA Only ISA with the Society within 6 months of their TESSA maturing.

2. We would recommend that the interest from the matured TESSA could be invested in a cash mini-ISA if the customer does not already have one.

3. To invest all or some of the matured funds in another YBS account.

4. To return a cheque to the customer for all or part of the matured funds.