Table of Contents
Executive Summary
-
- Impact of COVID-19 on ISAs
-
- Figure 1: Short-, medium- and long-term impact of COVID-19 on ISAs, November 2020
- The market
- Volume and value of ISAs increased in 2018-19
- Cash ISAs to receive a boost during pandemic
-
- Figure 2: Forecast of total cash ISA subscriptions, 2014/15-2024/25
- Stocks and shares to return to growth as volatility subsides
-
- Figure 3: Forecast of total stocks and shares ISA subscriptions, 2014/15-2024/25
- Interest rates sink to record lows…
-
- Figure 4: Average monthly quoted cash ISA variable and fixed rate, September 2012-September 2020
- …but lockdown and uncertainty leads to unprecedented savings activity
-
- Figure 5: UK household savings ratio at current prices, Q1 2000-Q2 2020
- Government intervention is anticipated during the recovery
- Companies and brands
- Providers look beyond rates to attract customers
- Advertising to adapt to the recovery phase
-
- Figure 6: Total above-the-line, online display and direct mail advertising expenditure on ISAs, by media type, 2015/16 to 2019/20
- Traditional providers continue to dominate the market
-
- Figure 7: Cash ISA provider used, March 2020
- The consumer
- Specialist ISAs show potential, but remain niche
-
- Figure 8: Savings and investment product ownership, September 2020
- People without ISAs feel they are not worth it for their circumstances
-
- Figure 9: Reasons for not owning an ISA, September 2020
- Half of savers without ISAs are unlikely to open one…
-
- Figure 10: Likelihood of opening an ISA, September 2020
- …with cash ISAs remaining the most appealing type
-
- Figure 11: Interest in different types of ISA, September 2020
- Existing holders show the endurance of the ISA habit
-
- Figure 12: Total value of contributions into any ISA product during the 2018/19 and 2019/20 tax years, and expected value of contributions during the 2020/21 tax year, August 2019 and September 2020
- Majority of ISA savers are unlikely to take defensive actions
-
- Figure 13: ISA actions and behaviours, September 2020
- Convenience is more important than ever
-
- Figure 14: Perceptions of ISA providers, correspondence analysis, September 2020
Issues and Insights
-
- COVID-19 forces accidental savings and shakes up the ISA market
- Low interest rates could boost product development and innovation
- A renewed focus on LISAs is likely during the recovery phase
The Market – Key Takeaways
-
- Volume and value of ISAs increased in 2018-19
- Cash ISAs to receive a boost during pandemic
- Lockdown and uncertainty lead to unprecedented savings activity
- Government intervention is expected during the recovery
Market Size and Forecast
-
- Impact of COVID-19 on the ISA market
-
- Figure 15: Short-, medium- and long-term impact of COVID-19 on ISAs, November 2020
- Volume and value of ISAs increased in 2018-19
-
- Figure 16: Number of ISAs and amounts subscribed, 2008/09-2018/19
- Cash ISAs to receive a boost during pandemic
-
- Figure 17: Forecast of total cash ISA subscriptions, 2014/15-2024/25
- Figure 18: Forecast of total cash ISA subscriptions, 2014/15-2024/25
- Stocks and shares to return to growth as volatility subsides
-
- Figure 19: Forecast of total stocks and shares ISA subscriptions, 2014/15-2024/25
-
- Figure 20: Forecast of total stocks and shares ISA subscriptions, 2014/15-2024/25
- Market drivers and assumptions
-
- Figure 21: Key drivers affecting Mintel’s ISA markets forecast (prepared on 25 November 2020), 2015-25
- Learnings from the last recession
-
- Figure 22: Value of ISA subscriptions, by component, 2006/07-2010/11
- Forecast methodology
Market Segmentation
-
- 2018-19 growth led by cash ISAs…
- …while stocks and shares sector contracts
-
- Figure 23: Volume and value of cash and stocks and shares ISA subscriptions, 2008/09-2018/19
- Average subscription values fall slightly
-
- Figure 24: Average subscription per account, by component type, 2008/09-2018/19
- LISAs reach 223,000 accounts
- Volume of IFISAs takes a hit as concerns are raised on associated risk
-
- Figure 25: Volume and value of IFISA and LISA subscriptions, 2016/17-2018/19
- OEICs account for 44% of stocks and shares investment
-
- Figure 26: Value of funds held in adult ISAs, by type of investment, 2016/17-2018/19
- Over 323,000 properties bought under now-closed Help to Buy ISA
-
- Figure 27: Help to Buy ISA scheme: key stats, December 2015-March 2020
Market Drivers
-
- Interest rates sink to record lows…
-
- Figure 28: Average monthly quoted cash ISA variable and fixed rate, September 2012-September 2020
- …but lockdown and uncertainty lead to unprecedented savings activity
-
- Figure 29: UK households’ savings ratio at current prices, Q1 2000-Q2 2020
- COVID-19 deals a heavy blow to the economy…
-
- Figure 30: GDP growth, annual change (November 2020 central forecast), 2015-25
- …with unemployment expected to peak in 2021
-
- Figure 31: Unemployment rate (November 2020 central forecast), 2015-25
Regulatory and Legislative Changes
-
- COVID-19 relaxes access to LISAs
- FCA cancels regulatory reviews in light of the pandemic
- Plans for Single Easy Access Rate for cash savings are scrapped
- Platform exit fees consultation halted
- Government intervention is expected during the recovery
Companies and Brands – Key Takeaways
-
- Providers look beyond rates to attract customers
- Advertising to adapt to the recovery phase
- Traditional providers continue to dominate the market
Market Share
-
- ‘Big Six’ dominate cash ISA market
-
- Figure 32: Cash ISA provider used, March 2020
- Fidelity remains the largest stocks and shares ISA provider among IA members
-
- Figure 33: Top 10 investment ISA providers, by ISA funds under management, May 2019 and May 2020
Competitive Strategies and Innovation
-
- New products help savers make a positive impact with their money
- Nationwide introduces prizes to attract new savers
- Virgin Money rewards loyalty
- Newcastle Building Society launches LISA mortgages
Advertising and Marketing Activity
-
- Adspend falls by 29%
-
- Figure 34: Total above-the-line, online display and direct mail advertising expenditure on ISAs, 2015/16-2019/20
- Stocks and shares account for 67% of adspend
-
- Figure 35: Total above-the-line, online display and direct mail advertising expenditure on ISAs, by product, 2015/16-2019/20
- TV takes over as leading channel for ISA adspend
-
- Figure 36: Total above-the-line, online display and direct mail advertising expenditure on ISAs, by media type, 2015/16 to 2019/20
- Nationwide is by a wide margin the biggest spender on cash ISAs
-
- Figure 37: Top 10 recorded above-the-line, online display and direct mail advertisers of cash ISAs, 2019/20
- Fidelity is the largest advertiser of stocks and shares ISAs
-
- Figure 38: Top 10 recorded above-the-line, online display and direct mail advertisers of stocks and shares ISAs, 2019/20
- Advertising and marketing in the recovery phase
- Nielsen Ad Intel coverage
The Consumer – Key Takeaways
-
- Consumer confidence to mirror social-distancing restrictions
- ISAs other than cash and stocks and shares remain niche
- Non product holders struggle to see the relevance of ISAs…
- …but existing holders show the endurance of the ISA habit
- Convenience is more important than ever
Impact of COVID-19 on Consumer Behaviour
-
- Confidence loses ground as new lockdown became inevitable
-
- Figure 39: The Financial Confidence Index, October 2015-October 2020
- Households are relatively positive about their current financial situation…
-
- Figure 40: The Financial Wellbeing Index, October 2015-October 2020
- …but many feel they have deteriorated over the last year
-
- Figure 41: Changes in household finances, October 2015-October 2020
Savings Product Ownership
-
- 68% of UK savers have an ISA product
-
- Figure 42: Savings and investment product ownership, September 2020
- 23% of savers have a stocks and shares ISA
- Other ISAs show potential, but remain niche
Reasons for Not Owning an ISA
-
- A lack of funds is the main reason for not owning an ISA…
- …with low interest rates making it not worth the hassle
-
- Figure 43: Reasons for not owning an ISA, September 2020
- ISAs can be confusing for young people
-
- Figure 44: Reasons for not owning an ISA, September 2020
- Addressing individual concerns can make ISAs more attractive
-
- Figure 45: Repertoire of reasons for not owning an ISA, September 2020
Likelihood of Opening an ISA
-
- Half of savers without ISAs are unlikely to open one
-
- Figure 46: Likelihood of opening an ISA, September 2020
- Young people more open to ISAs…
-
- Figure 47: Likelihood of opening an ISA, by age, September 2020
- …with cash ISAs remaining the most appealing type
-
- Figure 48: Interest in different types of ISA, September 2020
Recent ISA Savings Activity
-
- Over 70% contributed to their ISAs in 2019-20
-
- Figure 49: Total value of contributions into any ISA product during the 2019/20 tax year, September 2020
- Young men in employment are most likely to have contributed
-
- Figure 50: Total value of contributions into any ISA product during the 2018-19 tax year, by age, September 2020
- Individual ISA savings activity remained fairly constant pre-COVID-19
-
- Figure 51: Total value of contributions into any ISA product during the 2018/19 and 2019/20 tax years, August 2019 and September 2020
Expected ISA Savings Activity
-
- Savers expect to continue contributing to their ISAs in 2020-21…
-
- Figure 52: Total value of contributions into any ISA product during the 2018/19 and 2019/20 tax years, and expected value of contributions during the 2020/21 tax year, August 2019 and September 2020
- …with individual contributions expected to remain fairly similar
-
- Figure 53: Expected value of contributions into any ISA product in 2020/21, by reported value of contributions in 2019/20, September 2020
ISA Actions and Behaviours
-
- A third of holders are likely to grow their ISA savings
- Importance of reaching LISA targets early on
-
- Figure 54: ISA actions and behaviours, September 2020
- Majority of ISA savers are unlikely to take defensive actions…
- …but people will still shop around and compare rates
Perceptions of ISA Providers
-
- High-street providers are seen as convenient
-
- Figure 55: Perceptions of ISA providers, correspondence analysis, September 2020
- Specialists are perceived as expert and rewarding
- Digital-only banks continue to face perception challenges
-
- Figure 56: Perceptions of ISA providers, September 2020
Appendix – Data Sources, Abbreviations and Supporting Information
-
- Abbreviations
- Consumer research methodology
- CHAID analysis methodology
-
- Figure 57: CHAID, table output, September 2020
- Correspondence analysis methodology
Back to top