Table of Contents
Introduction
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- Abbreviations
- Market definitions
Executive Summary
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- The market
- ISA take-up increased in 2010/11… but the savings landscape remains difficult
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- Figure 1: Cash ISA value, 2006-16
- Figure 2: Stocks and shares ISA Value, 2006-16
- Savings ratio rebounds post-recession
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- Figure 3: UK savings ratio, 2000-10
- Market factors
- High inflation/low base rate makes saving unattractive
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- Figure 4: Average annual changes in the bank base rate, CPI and RPI – UK, 2000-10
- Stockmarket volatility makes stocks and shares ISAs only for the brave and wealthy
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- Figure 5: FTSE 100 and FTSE All Share – daily index movements, Jan 2000-Jul 2011
- Companies, brands and innovations
- Lloyds Banking Group is the leading ISA provider
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- Figure 6: Cash ISA market share, by volume, July 2011
- HBOS is the top stocks and shares provider
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- Figure 7: Top 15 unit trust/OEIC ISA fund managers, by value of funds under management, 2009-11
- Workplace savings plans to link ISAs to pensions
- Junior ISAs offer an opportunity for children’s future savings
- The consumer
- Consumers use ISAs to save for rainy days and retirement…
- … but they’re not using their full ISA allowances
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- Figure 8: Did you use your full cash ISA allowance in the last tax year?
- More than a quarter had opened a new ISA within a few months of the new tax year
- What we think
Issues in the Market
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- Are consumers using their full ISA allowance?
- Why do consumers choose to save with ISAs?
- Who are the major players in the ISA market?
- Will Junior ISAs be taken up as intended?
- Will changes in the advisory landscape impact ISAs?
Future Opportunities
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- Consumer openness and collaboration could see new approaches to saving and investing
- ISAs are a good-news product in a bad-news environment
Internal Market Environment
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- Key points
- A shift towards stocks and shares ISAs?
- The banks aren’t all convinced
- ISA switching made easier
- Are ISAs excluding some sections of society?
- The IPPR proposes changes to the ISA regime
- Junior ISAs
- The problem with Junior ISAs
- Junior ISAs and Child Trust Funds
- RDR implementation continues
- RDR and the impact on ISAs
- How will the RDR changes impact banks?
- Bank concerns about switching increasing
- Fixed term ISAs exacerbate the issue
- Competition and negative margins for the banks
Broader Market Environment
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- Key points
- FTSE Performance
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- Figure 9: FTSE 100 and FTSE All Share – daily index movements, Jan 2000-Jul 2011
- People are using ‘cash parks’ to store their investments until they know where to put it
- Savings ratio is now higher than pre- recession
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- Figure 10: UK savings ratio, 2000-10
- Message on saving not aligned to the reality savers face
- What are consumers doing with their money if they are not saving?
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- Figure 11: Most important spending priorities for 2011, January 2011 (figures expressed as a %)
- Debt concerns
- Low base rate, high RPI could see a change in savings methods
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- Figure 12: Average annual changes in the bank base rate, CPI and RPI - UK, 2000-10
- Consumer confidence
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- Figure 13: Savings intentions and the savings climate: March 2000-June 2011
- Pensions vs ISAs
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- Figure 14: ISA Intentions vs. Pension Intentions
Competitive Context
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- Key points
- Savings accounts
- Pension saving could deflect from ISAs
- Notice accounts compete with ISAs to offer best returns
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- Figure 15: Average monthly quoted deposit interest rates at banks and building societies, January 2000-May 2011
- Investment products comparison
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- Figure 16: Retail investment product sales, year to 31 March 2011
- Chasing high interest rates – where are people putting their money?
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- Figure 17: Unit trust and OEIC funds under management, 2004-10
Strengths and Weaknesses in the Market
Who’s Innovating?
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- Key points
- ISA differentiation
- ‘Early Intervention ISAs’
- Workplace savings plans
- Barclays 0% initial charge investment ISA
- Halifax Promise
- Nationwide Protected Equity Bond
Total ISA Market Size
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- Key points
- ISA subscriptions rose by 22% in 2010/11…
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- Figure 18: Number of ISA accounts and amounts subscribed, 1999/2000-2010/11
- …and funds held within ISAs also grew sharply
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- Figure 19: Value of funds held in ISAs, by type of investment, 2005-10
- Stocks and shares ISAs see big increases in amounts subscribed per account whereas cash ISAs are languishing
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- Figure 20: Average amounts subscribed per account, 1999/2000-2009/10
Cash ISA Market Segmentation and Forecast
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- Key points
- Growth in the cash ISA market falters
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- Figure 21: Number of cash ISA accounts and amounts subscribed, segmented by type, 1999/2000-2010/11
- Types of cash ISA, 2009-10
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- Figure 22: Types of cash ISA, 2009-10
- Cash ISA forecast
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- Figure 23: Cash ISA volume forecast, 2006-16
- Figure 24: Cash ISA value forecast, 2006-16
Stocks and Shares ISA Market Segmentation and Forecast
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- Key points
- Stocks and shares ISAs showing notable growth
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- Figure 25: Number of stocks and shares ISA accounts and amounts subscribed, segmented by type, 1999/2000-2010/11
- Types of stocks and shares ISA, 2009-10
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- Figure 26: Types of stocks and shares ISA, 2009-10
- ISA sales playing an increasingly important role in retail sales
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- Figure 27: Total net retail unit trust/OEIC sales and net retail ISA sales, 2005-10
- Forecast
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- Figure 28: Stocks and shares ISA Volume, 2006-16
- Figure 29: Stocks and shares ISA Value, 2006-16
Market Share
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- Key points
- Bank share of cash ISA balances growing
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- Figure 30: Cash ISA balances, by provider, May 2011
- Lloyds Banking Group is the leading cash ISA provider
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- Figure 31: Cash ISA ownership, by banking group and brand, July 2011
- UK Funds under management – HBOS is the leading fund manager
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- Figure 32: Total ISA funds under management January/May 2011
- HBOS tops ISA fund rankings, Fidelity falls behind
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- Figure 33: Top 15 unit trust/OEIC ISA fund managers, by value of funds under management, 2009-11
Companies and Products
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- Company profiles
- Barclays
- Fidelity
- Grupo Santander
- Invesco Perpetual
- Legal & General
- Lloyds Banking Group
- Nationwide
- RBS
Channels to Market
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- Key points
- Cash ISAs – simple for consumer and bank
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- Figure 34: Product ownership, March 2011
- Stocks and shares ISAs channels to market
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- Figure 35: Gross retail ISA sales by sector and distribution channel October 2010-May 2011
- RDR recommendations could see changes in ISA channels
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- Figure 36: Number of advised and non-advised ISA sales, 2006-10
Brand Communication and Promotion
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- Key points
- Cash ISAs account for a quarter of savings adspend
- Cash ISAs are the focus
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- Figure 37: Total advertising expenditure on ISAs, by product category, 2007-11
- Seasonal spending dominates
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- Figure 38: Average monthly adspend on ISAs as a percentage of annual adspend, 2010
- Cash ISA providers look to reach the mass market
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- Figure 39: Adspend on Cash ISAs, by media type, 2009-11
- Investment ISA adspend decreasing
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- Figure 40: Adspend on other Investment ISAs, by media type, 2009-11
- Lloyds Banking Group tops the adspend tables
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- Figure 41: Top 15 ISA advertisers, 2009-11
ISA Ownership
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- Key points
- Note on consumer research
- Half of adults hold savings accounts and a third hold ISAs
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- Figure 42: Savings and investment ownership, July 2011
- Gender differences in ISA approaches
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- Figure 43: ISA ownership, by gender, July 2011
- Older consumers more likely to save with cash ISAs
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- Figure 44: Age-related saving activity cash ISAs, July 2011
- Saving varies widely by household income
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- Figure 45: Savings and Investments by Household Income, July 2011
Choice of Cash ISA Provider
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- Key points
- Lloyds Banking Group leading cash ISA provider
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- Figure 46: Cash ISA providers, July 2011
- Nationwide punching above its weight in the notice market
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- Figure 47: Financial services provider, by Cash ISA ownership, July 2011
- The high street giants have broadened the appeal of ISAs
ISA Transfer Activity
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- Key points
- Low levels of ISA transfer activity
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- Figure 48: ISA transfer activity, July 2011
- Transfer activity by provider
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- Figure 49: Cash ISA provider, by ISA transfer activity, July 2011
- Financially savvy – but still reluctant to switch
ISA Activity in the Current Tax Year
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- Key points
- An early surge in cash ISA opening
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- Figure 50: “Have you opened a new cash ISA in the current tax year (i.e. since April 2011)?”, by type of cash ISA owned, July 2011
- Even the active ISA savers are reluctant to transfer past accounts
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- Figure 51: ISA transfer activity, by ISA activity in the current tax year, July 2011
- The legacy of a lifetime of saving
Cash ISA Allowance Usage
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- Key points
- Consumers are not making the most of their cash ISA allowance
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- Figure 52: Level of cash ISA contributions, by cash ISA ownership, July 2011
Main Reasons for Saving or Investing
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- Key points
- Short-term savings are key for consumers
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- Figure 53: Reasons for saving or investing July 2011
- What other savings methods are consumers using?
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- Figure 54: Reasons for saving or investing, by most popular savings and investment ownership July 2011
- Shifting accounts to cover major purchases
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- Figure 55: Reasons for saving or investing, by ISA transfer activity, July 2011
- Take care of the emergency fund – then think about returns
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- Figure 56: Reasons for saving or investing, by ISA activity in the current tax year, July 2011
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- Figure 57: Reasons for saving or investing, by level of cash ISA contributions, July 2011
Targeting Opportunities
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- Key points
- A large portion of consumers have no savings or investments
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- Figure 58: Savings and investment ownership, July 2011
- Nationwide converting the multiple account holders
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- Figure 59: Cash ISA provider, by repertoire of savings and investment ownership, July 2011
- Long-term savers are spreading the risk
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- Figure 60: Reasons for saving or investing, by repertoire of savings and investment ownership, July 2011
- How to move beyond the traditional targets
Appendix – Market Size and Forecast
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- Cash ISA Volume
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- Figure 61: Best case/worst case cash ISA volume forecast, 2011-16
- Cash ISA Value
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- Figure 62: Best case/worst case cash ISA value forecast, 2011-16
- Stocks and shares ISA Volume
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- Figure 63: Best case/worst case stocks and shares ISA volume forecast, 2011-16
- Stocks and shares ISA Value
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- Figure 64: Best case/worst case stocks and shares ISA value forecast, 2011-16
Appendix –ISA Ownership
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- Figure 65: Most popular savings and investment ownership, by demographics, July 2011
- Figure 66: Next most popular savings and investment ownership, by demographics, July 2011
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Appendix – Choice of Cash ISA Provider
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- Figure 67: Most cash ISA provider, by demographics, July 2011
- Figure 68: Next most popular cash ISA provider, by demographics, July 2011
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Appendix – ISA Activity in the Current Tax Year
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- Figure 69: “ ISA transfer activity, by demographics, July 2011
- Figure 70: “Have you opened a new cash ISA in the current tax year?”, July 2011
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Appendix – Cash ISA Allowance Usage
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- Figure 71: In the last tax year, did you use your full cash ISA allowance?, July 2011
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Appendix – Most Popular Reasons for Saving or Investing
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- Figure 72: Most popular reasons for saving or investing, by demographics, July 2011
- Figure 73: Next most popular reasons for saving or investing, by demographics, July 2011
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- Figure 74: Repertoire of savings and investment ownership, by demographics, July 2011
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