Lloyds using ISA transfer system

Customers with Lloyds Banking Group will now be able to send or receive cash ISA funds through a new electronic transfer process.

The new technology will be available to those who bank with Lloyds TSB, Halifax and Cheltenham & Gloucester, and aims to cut the time taken to transfer savings from one ISA account to another.

The group is the latest to sign up to the technology after financial institutions Abbey and the Royal Bank of Scotland group already signed up to the initiative.

There is currently a £3,600-a-year limit on how much someone can save in an ISA, so if people want to move their account to a different provider and not lose their tax-free status, the funds have to be transferred.

But last year the British Bankers' Association (BBA) introduced transfer timescales after problems with delays to the transfer process.

Colin Walsh, managing director of savings and investment at Lloyds Banking Group, said: "The industry-wide delays experienced by customers last year were largely due to the outdated cheque and postal system on which the ISA transfer market was dependent.

"The move to electronic transfers is an important step forward but it is essential we continue to work together as an industry to improve the process."

Up to 1,000 transfers a day could be carried out more efficiently during the peak ISA season as a result of the new electronic process, the BBA believes.

Consumers have until midnight on Sunday to use their ISA allowance for this tax year, with many ISA providers operating extended opening hours to enable people to deposit their cash before the start of the new tax year on Monday.