Table of Contents
Introduction
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- Product definitions
- Abbreviations
Executive Summary
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- The market
- The ISA market is expected to grow over the next five years, aided by the 2014 Budget changes
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- Figure 1: Forecast of total adult ISA subscriptions, at current prices – fan chart, 2008/09-2018/19
- OEICs and Unit Trusts grow in popularity
- Market factors
- The 2014 Budget will shake up the savings, investments and pensions industry
- Falling savings ratio has hit cash savings
- The FLS and BoE base rate continue to keep ISA interest rates at rock bottom
- Increasing numbers of ISAs are sold directly online
- Other recent market developments
- Companies, brands and innovation
- The largest banks dominate the cash ISA market
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- Figure 2: Providers’ market share based on total retail savings balances, shown on a group basis, UK, 2013
- St.James’s Place becomes the largest unit trust/OEIC ISA provider
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- Figure 3: Top ten unit trust/OEIC ISA providers, by value of funds under management, May 2014
- Adspend for cash ISAs continues to decrease as adspend on stocks and shares ISAs increases
- The consumer
- A quarter of adults have an instant access cash ISA
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- Figure 4: Ownership of savings and investment products, June 2014
- 31% simply opted for the ISA that their current account provider was offering
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- Figure 5: Reasons to choose an ISA Provider, June 2014
- Around a quarter of consumers use their ISA for unexpected events
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- Figure 6: Uses for ISA savings or investments, June 2014
- Half of all ISA holders are happy with their existing provider
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- Figure 7: Attitudes towards ISAs, June 2014
- Instant access is the key attraction, even at the cost of interest payments
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- Figure 8: Preferences of types of cash ISA accounts, June 2014
- What we think
Issues and Insights
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- NISA flexibility will make consumers more willing to dabble in stocks and shares
- The facts
- The implications
- ISAs will complement, not compete with pensions, despite pension reforms
- The facts
- The implications
- Few consumers will be able to take full advantage of the new ISA allowance
- The facts
- The implications
Trend Application
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- Giving consumers the flexibility to meet unexpected costs and save for the future
- Nudging consumers towards better savings habits
- Mintel futures: Generation Next
Market Drivers
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- Key points
- 2014 Budget changes
- ISA changes
- Changes to annuities
- Savings ratio is falling as consumer confidence picks up
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- Figure 9: Annual savings ratio, Q1 2008 – Q1 2014
- Retail deposits continue to grow modestly to mid-2014
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- Figure 10: Retail savings balances, by sector, 2005-14
- FLS will contribute towards low rates for another two-and-a-half years
- Child Trust Funds will be allowed to be transferred to Junior ISAs
- The Cash Savings Market Study investigates competition in the cash ISA market
- Low base rate and inflation continue to hurt savers
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- Figure 11: Bank of England base rate, CPI and RPI – UK, January 2006- June 2014
- Cash ISA rates continue to decrease and remain lower than inflation
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- Figure 12: Average monthly quoted cash ISA variable rate and fixed rate, January 2011-May 2014
- Global stock markets recover to pre-recession levels
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- Figure 13: Performance of FTSE 100, Nikkei 225 and S&P 100, January 2003-August 2014
Who’s Innovating?
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- Key points
- HSBC launches loyalty range of cash ISAs and ends teaser rates
- Nationwide launches simple investment range
- Sun Life Direct to launch £10 per month ISA
- James Hay launch modular ISA
Market Size and Forecast
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- Key points
- The number of ISAs subscribed to decreased in 2013/14
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- Figure 14: Number of ISAs and amounts subscribed, 2005/06-2013/14
- Low cash interest rates increase the appeal of equities, at the expense of cash savings
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- Figure 15: Number of ISAs and amounts subscribed, segmented by component type, 2005/06-2013/14
- The new £15,000 annual allowance will boost average subscription amounts
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- Figure 16: Average subscription per account, 2008/09-2013/14
- OEICs and Unit Trusts grow in popularity
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- Figure 17: Value of funds held in adult ISAs, by type of investment, 2012-14
- The ISA market is expected to grow, aided by the 2014 Budget changes
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- Figure 18: Forecast of total adult ISA subscriptions, at current prices – fan chart, 2008/09-2018/19
- Figure 19: Forecast of total adult ISA subscriptions, 2013/14-2018/19
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- Figure 20: Forecast of new adult ISA business, by component at current prices, 2013/14-2018/19
- Forecast methodology
- Fan chart explanation
Market Share
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- Key points
- The largest banks dominate the cash ISA market
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- Figure 21: Ranking of the largest providers of cash ISAs and other savings accounts, by proportion of customers, January 2014
- Lloyds Banking Group dominated retail customer deposit balances in 2013
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- Figure 22: Providers’ total retail savings balances, shown on a group basis – UK, 2011-13
- St James’s Place becomes the largest unit trust/OEIC ISA provider
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- Figure 23: Top ten unit trust/OEIC ISA providers, by value of funds under management, 2012-14
- Unit trust and OEIC ISA sales increased in the last tax year
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- Figure 24: Net retail unit trust/OEIC ISA sales, 2007/08-2013/14
Companies and Products
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- Lloyds Banking Group
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- Figure 25: Lloyds Banking Group cash ISA range, July 2014
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- Figure 26: Key annual financial data for Lloyds Banking Group, 2012 and 2013
- Santander
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- Figure 27: Santander’s ISA product range, July 2014
- Figure 28: Key annual financial data for Santander UK, 2011-13
- Nationwide
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- Figure 29: Nationwide’s cash ISA product range, July 2014
- Figure 30: Key financial data for Nationwide Building Society, 2013 and 2014
- St. James’s Place (SJP)
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- Figure 31: Key financial data for St.James’s Place plc
Brand Communication and Promotion
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- Key points
- Adspend on cash ISAs continues to fall
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- Figure 32: Total advertising expenditure on ISAs, by component type, 2009/10-2013/14
- The Post Office became the largest ISA advertiser in 2014
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- Figure 33: Top ten advertisers of cash ISAs, 2012-14
- Scottish Friendly became the largest stocks and shares ISA advertiser in 2014
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- Figure 34: Top ten advertisers of stocks and shares ISAs, 2012-14
Channels to Market
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- Key points
- Online channels are increasingly popular in researching, applying for and managing cash ISAs
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- Figure 35: Preferences for retail banking channels, by ownership of different types of savings accounts, January 2014
- Fund platforms accounted for the majority of fund sales in ISAs
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- Figure 36: Gross retail ISA OEIC and unit trust sales, by distribution channel, 2013/14
Ownership of ISAs
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- Survey background
- Key points
- Having instant access appealing to consumers
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- Figure 37: Ownership of ISAs and other savings and investment products, June 2014
- Savings accounts are easier for consumers to understand than ISAs
- Stocks and shares ISAs are the most popular way to hold investments
- A large proportion of consumers have no savings or investments
- An older, more affluent customer base
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- Figure 38: Ownership of ISAs, by demographics, June 2014
Reasons to Choose an ISA Provider
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- Key points
- A third of ISA holders took out an ISA from their bank account provider
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- Figure 39: Reasons to Choose an ISA Provider, June 2014
- Stocks and shares ISA holders are less likely to use their current account provider
- Recommendations not decisive in helping consumers choose their ISA provider
- Loyalty rates succeed in encouraging 17% of consumers to choose their ISA provider
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- Figure 40: Reasons to choose an ISA provider, by reasons to choose an ISA provider, June 2014
- Four out of ten ISA holders chase the best interest rate
- ISA holders also look for a well-known brand and good customer service
Uses for ISA Savings or Investments
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- Key points
- The most popular use for ISA savings/investments is to fund retirement
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- Figure 41: Uses for ISA savings or investments, June 2014
- Around a quarter use their ISA to pay for emergencies or unexpected events
- A fifth of ISA holders use their account to grow their wealth
- Unstructured saving can prevent consumers from building up their savings
Attitudes towards ISAs
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- Key points
- Over half of ISA holders are happy with their ISA
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- Figure 42: Attitudes towards ISAs, June 2014
- Twice as many ISA holders contribute ad hoc as contribute regularly
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- Figure 43: Attitudes towards ISAs, by ownership of ISAs, June 2014
- Changes to the ISA allowance will only benefit wealthier ISA holders
- Only 38% of cash ISA holders are investing to take advantage of the tax benefits
Preferences for Types of ISA Savings Accounts
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- Key points
- Low interest easy access ISAs are the most popular among consumers
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- Figure 44: Cash ISA account preferences
- 17% of consumers are prepared to lock their money away for 5 years
- A fifth of consumers don’t know what they want
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- Figure 45: Preferences of types of ISA savings accounts, by demographics, June 2014
Appendix – Market Size and Forecast
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- Total market forecast – best- and worst-case scenarios
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- Figure 46: Value of new adult ISA subscriptions – best- and worst-case scenarios, at current prices, 2013/14-2018/19
- Market forecast by sector
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- Figure 47: Value and volume of new adult ISA subscriptions, by component, at current prices, 2008/09-2018/19
- Cash ISA forecast
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- Figure 48: Forecast of cash ISA subscriptions, at current prices – fan chart, 2008/09-2018/19
- Figure 49: Forecast of cash ISA subscriptions, 2013/14-2018/19
- Figure 50: Forecast of cash ISA subscriptions – best- and worst-case scenarios, at current prices, 2013/14-2018/19
- Stocks and shares forecast
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- Figure 51: Forecast of stocks and shares ISA subscriptions, at current prices – fan chart, 2008/09-2018/19
- Figure 52: Forecast of stocks and shares ISA subscriptions, 2013/14-2018/19
- Figure 53: Forecast of stocks and shares ISA subscriptions – best- and worst-case scenarios, at current prices, 2013/14-2018/19
- Forecast methodology
- Fan chart explanation
Appendix – Ownership of ISAs
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- Figure 54: Ownership of ISAs, by demographics, June 2014
- Figure 55: Ownership of ISAs, by demographics, June 2014
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- Figure 56: Ownership of ISAs, by demographics, June 2014
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Appendix – Reasons to Choose an ISA Provider
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- Figure 57: Reasons to choose an ISA provider, by demographics, June 2014
- Figure 58: Reasons to choose an ISA provider, by demographics, June 2014
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- Figure 59: Reasons to choose an ISA provider, by demographics, June 2014
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Appendix – Uses for ISA Savings or Investments
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- Figure 60: Uses for ISA savings or investments, by demographics, June 2014
- Figure 61: Uses for ISA savings or investments, by demographics, June 2014
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Appendix – Attitudes towards ISAs
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- Figure 62: Attitudes towards ISAs, by demographics, June 2014
- Figure 63: Attitudes towards ISAs, by demographics, June 2014
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- Figure 64: Attitudes towards ISAs, by demographics, June 2014
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Appendix – Preferences for Types of ISA Savings Accounts
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- Figure 65: Preferences for types of ISA savings accounts, by demographics, June 2014
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