Table of Contents
Executive Summary
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- The market
- The value of ISA subscriptions grew by 13% in 2017/18
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- Figure 1: Number of ISAs and amount subscribed, 2011/12-2017/18
- Cash ISA segment projected to stagnate
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- Figure 2: Forecast of total cash ISA subscriptions, 2013/14-2023/24
- Stocks and shares ISA contributions forecast to experience continued growth
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- Figure 3: Forecast of total stocks and shares ISA subscriptions, 2013/14-2023/24
- Savings ratio being depressed by low rates paid on savings accounts
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- Figure 4: Average monthly quoted cash ISA variable and fixed rate, 31 August 2015-31 August 2019
- Innovative finance ISA facing increased regulatory pressure
- Companies and brands
- Nationwide remains the top cash ISA provider
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- Figure 5: Ranking of cash ISA providers, by proportion of ISA holders, February 2019
- Hargreaves Lansdown the biggest provider of stocks and shares ISAs
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- Figure 6: Top 10 investment ISA providers, by ISA funds under management, May 2018 and May 2019
- Overall ISA adspend rises by 69%
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- Figure 7: Total above-the-line, online display and direct mail advertising on ISAs, 2014/15-2018/19
- The consumer
- ISA ownership is widespread among UK adults
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- Figure 8: Savings product ownership, August 2019
- ISA contributions most heavily concentrated at values below £5,000
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- Figure 9: Value of contributions into any ISA product in the 12 months to April 2019, August 2019
- Around a third of account holders use their ISA for most or all their savings
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- Figure 10: Proportion of savings and investment funds contributed into an ISA, August 2019
- Earning returns tax-free remains the most common reason for opening an ISA
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- Figure 11: Reasons for opening an ISA, August 2019
- Cash ISAs viewed by most ISA owners as less attractive than a few years ago
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- Figure 12: Attitudes towards ISAs, August 2019
- What we think
Issues and Insights
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- Innovative Finance ISAs were always destined to be a niche product
- The facts
- The implications
- A back-to-basics approach may be needed to simplify the ISA market
- The facts
- The implications
The Market – What You Need to Know
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- The overall value of ISA subscriptions rose by 13% in 2017/18
- Continued growth in stocks and shares ISA contributions projected
- Savings ratio remains near historic low
- Innovative finance ISA coming under increased regulatory scrutiny
Market Size
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- The value of ISA subscriptions rose by 13% in 2017/18
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- Figure 13: Number of ISAs and amount subscribed, 2011/12-2017/18
- Value of stocks and shares ISA contributions up by 29%
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- Figure 14: Number of ISAs and amounts subscribed, by component type, 2011/12-2017/18
- Average subscription values for stocks and shares now over £10,000
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- Figure 15: Average subscription per account, by component type, 2011/12-2017/18
- OEICs the most common type of stocks and shares investment
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- Figure 16: Value of funds held in adult ISAs, by type of investment, 2013/14-2017/18
- £517 million contributed to Lifetime ISAs in the first year
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- Figure 17: Value of lifetime and innovative finance ISAs subscriptions, 2017/18
- Note about change to HMRC ISA statistics release schedule
Market Forecast
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- Cash ISA subscription levels projected to remain flat over next five years
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- Figure 18: Forecast of total cash ISA subscriptions, 2013/14-2023/24
- Figure 19: Forecast of total cash ISA subscriptions, 2013/14-2023/24
- Stocks and shares ISA subscriptions could reach £43 billion by 2023/24
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- Figure 20: Forecast of total stocks and shares ISA subscriptions, 2013/14-2023/24
- Figure 21: Forecast of total stocks and shares ISA subscriptions, 2013/14-2023/24
- Forecast methodology
Market Drivers
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- Savings ratio continues to hover near historic low
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- Figure 22: UK household national accounts savings ratio and cash basis savings ratio, at current prices and seasonally adjusted, Q1 2015-Q1 2019
- Low cash ISA rates have made stocks and shares ISAs more attractive
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- Figure 23: Average monthly quoted cash ISA variable and fixed rate, 31 August 2015-31 August 2019
- Overabundance of ISA product options may be causing confusion
Regulatory and Legislative Environment
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- Help to Buy ISA closed to new applicants from 30 November 2019
- Government urged to lift LISAs transfer limits for H2B ISA holders
- Innovative finance ISAs could be on their way out
- New rules will restrict investor access to P2P investments
- FCA proposes ban on investment platform exit fees
Companies and Brands – What You Need to Know
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- Nationwide the leading cash ISA provider…
- …while Hargreaves Lansdown leads in stocks and shares
- Most notable company activity taking place on the investment side
- Big banking brands yet to enter the LISA market
- Overall ISA adspend rises by 69%
Market Share
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- Major high street brands dominate cash ISA market
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- Figure 24: Ranking of cash ISA providers, by proportion of ISA holders, March 2018 and February 2019
- Fidelity is the largest stocks and shares ISA provider among IA members
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- Figure 25: Top 10 investment ISA providers, by ISA funds under management, May 2018 and May 2019
Competitive Strategies and Innovation
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- Major high street brands still not offering Lifetime ISAs
- Skipton Building Society launches ‘special edition’ tracker cash ISA
- Stocks and shares ISA and IFISA competitive strategies
- Goldman Sachs set to enter ISA market via digital-only Marcus brand
- Hargreaves Lansdown acquires 33,000 ISA clients from JPMorgan
- Hargreaves Lansdown scraps exit fees
- Vitality enters the ISA market
- Nutmeg adds drip-feed option into its stocks and shares ISA
- Orca Money launches IFISA offering access to multiple P2P lenders
Advertising and Marketing Activity
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- Total adspend on ISAs rises by 69%
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- Figure 26: Total above-the-line, online display and direct mail advertising on ISAs, 2014/15-2018/19
- Nationwide responsible for a third of all cash ISA adspend
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- Figure 27: Top 10 recorded above-the-line, online display and direct mail advertisers of cash ISAs, 2014/15-2018/19
- Fidelity remains the biggest advertiser of stocks and shares ISAs
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- Figure 28: Top 10 recorded above-the-line, online display and direct mail advertisers of stocks and shares ISAs, 2014/15-2018/19
- Just over a third of adspend is put towards press advertising
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- Figure 29: Total above-the-line, online display and direct mail advertising expenditure on ISAs, by media type, 2018/19
- Nielsen Ad Intel coverage
The Consumer – What You Need to Know
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- Most UK savers own an ISA product
- Contributions into ISAs tend to be below £5,000 a year
- Tax-free returns remain the top reason for opening an ISA
- 64% agree that cash ISAs are less attractive than in the past
Savings Product Ownership
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- Seven in 10 UK savers own an ISA product
- One in four savers have a stocks and shares ISA
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- Figure 30: Savings and investment product ownership, August 2019
- 12% of eligible savers own a Lifetime ISA
ISA Savings Activity
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- One in four ISA holders contributed £5,000 or more in 2018/19
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- Figure 31: Total value of contributions into any ISA product during the 2018/19 tax year, August 2019
- Contribution levels highest among 25-44 year olds
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- Figure 32: Total value of contributions into any ISA product during the 2018/19 tax year, by age, August 2019
- Over a third use their ISA for all or most of their savings
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- Figure 33: Proportion of overall savings and investment funds contributed into an ISA, August 2019
- Cash ISA contributions are prioritised over stocks and shares
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- Figure 34: Prioritisation of ISA contributions, by type of ISA, August 2019
Reasons for Owning an ISA
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- Tax-free earnings the top reason for opening an ISA
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- Figure 35: Reasons for opening an ISA, August 2019
- Two fifths of under-35s opened an ISA to save for a house
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- Figure 36: Reasons for opening an ISA, by age, August 2019
- Most only have one or two reasons for opening an ISA
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- Figure 37: Repertoire of reasons for opening an ISA, August 2019
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- Figure 38: Repertoire of reasons for opening an ISA, by reasons for opening an ISA, August 2019
Attitudes and Behaviour towards ISAs
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- Two thirds of ISA holders like to keep an eye out for the best deals
- Most perceive cash ISAs to be less attractive
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- Figure 39: Attitudes towards ISAs, August 2019
- 73% of under-35s say they are regularly contributing to their ISA
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- Figure 40: Agreement with the statement “I contribute to my ISA(s) on a regular basis”, by age, August 2019
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
Appendix – Market Size and Forecast
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- Best- and worst-case forecasts for cash ISA subscription value
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- Figure 41: Best- and worst-case forecasts for total adult cash ISA subscriptions, at current prices, 2018/19-2023/24
- Best- and worst-case forecasts for stocks and shares ISA subscription value
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- Figure 42: Best- and worst-case forecasts for total stocks and shares ISA subscriptions, at current prices, 2018/19-2023/24
- Forecast methodology
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