The tax-free status of thousands of cash ISAs is still under threat as the Inland Revenue investigates allegations that some providers have not been sticking to the rules.

The controversy surrounds cash ISAs (Individual Savings Accounts) which do not allow customers to transfer or withdraw money for a fixed term.

Money Box has learned that the Bradford & Bingley, Liverpool & Victoria and Julian Hodge Bank are all in talks with the Inland Revenue concerning the status of some of their products.

The Inland Revenue has refused to comment on individual cases but said in a statement: "Financial products that do not allow investors to transfer or withdraw their funds do not properly belong within the ISA scheme.

"We are aware that some ISA products do restrict investor transfer or access, and we will be talking to the ISA managers concerned with a view to changing the products slightly."

ISA were introduced to encourage more people to save for the long-term. The schemes were designed to be flexible and to allow customers access to their savings quickly if necessary.

The Revenue has tried to reassure ISA customers that the matter is purely technical and will not affect the status of individual investments.

Money Box looked at the issue on Saturday 11 May 2002

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