Table of Contents
Introduction
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- Abbreviations
- Market definitions
Executive Summary
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- The market
- ISA market expected to increase in value terms…
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- Figure 1: Total ISA market, by value, 2007-17
- …but volume growth will be harder to achieve
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- Figure 2: Total ISA market, by volume, 2007-17
- Market factors
- Inflation rates decreasing
- Interest rates negating cash ISA tax relief savings incentive
- Stockmarket performance
- ISA contributions higher than pension contributions
- RDR a threat to the stocks and shares ISA market
- Junior ISAs struggling
- Companies, products and innovations
- LBG has the largest cash ISA market share
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- Figure 3: Cash ISA provider, June 2012
- Scottish Widows leads the way in ISA funds under management
- Product innovations
- The consumer
- Some 37% of adults hold an ISA
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- Figure 4: Savings and investment product ownership, June 2012
- Some 12% of people have transferred their ISA in the last year
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- Figure 5: ISA transfer activity, June 2012
- Interest rates are the key reason for changing ISA provider
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- Figure 6: Reasons for switching ISA provider, June 2012
- Saving for financial peace of mind tops the saving motivation list
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- Figure 7: Reasons for saving, June 2012
- What we think
Issues in the Market
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- How will the ISA market cope with the end of Baby Boomer contributions?
- How can workplace ISAs work alongside occupational pensions?
- How will the RDR change the stocks and shares ISA market?
- Has the Junior ISA failed?
Trend Application
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- ISAs lead the charge when it comes to a more flexible way of retirement saving
- Can morality differentiate providers in the homogenous ISA market?
- Older people lead by example
Market Drivers
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- Key points
- Equity ISA subscriptions overtake pension contributions
- ISA savings intentions continue to outstrip pension saving intentions
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- Figure 8: ISA intentions vs. pension intentions, Q3/Q4 2002-Q1/Q2 2011
- Tax wrapper transfers to encourage saving
- Workplace ISAs attract investors with discounted fund charges
- Standard Life proposes an extension to auto-enrolment to include workplace ISAs
- The RDR is set to impact the stocks and shares ISA market
- Junior ISAs proving unpopular
- Using stocks and shares ISAs for mortgage repayment
- The stock market yet to show prolonged recovery and growth
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- Figure 9: FTSE 100 and FTSE All Share – daily index movements, January 2002-June 2012
- Savings ratio highlights cautious consumer mindset
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- Figure 10: UK savings ratio, 2001-11
- Inflation is falling which could boost market in 2013
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- Figure 11: Average monthly changes in the bank base rate, CPI and RPI – UK, January 2001-May 2012
- Branch notice account rates eating into cash ISA tax incentive advantage
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- Figure 12: Average monthly quoted deposit interest rates at banks and building societies, January 2001-May 2012
SWOT Analysis for ISA Market
Who’s Innovating?
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- Key points
- Halifax and Bank of Scotland launched premium bond-style savings prize draw
- Barclays launches cash ISA Thank You prize draw
- The Rory McIlroy Two-Year Fixed-rate Major ISA
- Nationwide launches an ISA Save to Buy account
- Halifax uses high-paying JISA to entice parents
- Socially responsible ISA best-buy table
Total ISA Market Size and Forecast
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- Key points
- ISA subscriptions falter in the 2011/12 tax year
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- Figure 13: Number of ISAs and amounts subscribed, 2004/05-2011/12
- Continued growth in funds held within ISAs…
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- Figure 14: Value of funds held in ISAs, by type of investment, 2006/07-2011/12
- …but decline in the value of funds held in securities
- Stocks and shares average subscriptions jumped in 2011/12
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- Figure 15: Average amounts subscribed per account, 1999/2000-2011/12
- Total ISA market size will perform well if people use their full allowances
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- Figure 16: Total ISA market, by value, 2007-17
- Figure 17: Forecast the total ISA market, by value, 2007-17
- The desire for a financial safety net will see total ISA volumes grow
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- Figure 18: Total ISA market, by volume, 2007-17
- Figure 19: Forecast for the total ISA market, by volume, 2007-17
- Forecast methodology
Cash ISA Market Segmentation and Forecast
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- Key points
- Cash ISAs popularity is increasing according to the BBA…
- …but HMRC figures show a loss of ISA appetite in the 2011/12 tax year
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- Figure 20: Number of cash ISAs and amounts subscribed, 1999/2000-2011/12
- Fixed-rate cash ISAs growing in popularity
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- Figure 21: Types of cash ISA, 2009-11
- Cash ISA market value set to see marginal growth
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- Figure 22: Cash ISA market, by value, 2007-17
- Figure 23: Forecast for the cash ISA market, by value, 2007-17
- Cash ISA market volumes set to remain constant
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- Figure 24: Cash ISA market, by volume, 2007-17
- Figure 25: Forecast for the cash ISA market, by volume, 2007-17
Stocks and Shares ISA Market Segmentation and Forecast
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- Key points
- Number of stocks and shares ISAs subscribed drops in 2011/12
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- Figure 26: Number of stocks and shares ISAs and amounts subscribed, segmented by type, 1999/2000-2011/12
- Net retail ISA sales down on 2009 and 2010 figures
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- Figure 27: Total net retail unit trust/OEIC sales and net retail sales, 2006-11
- Stocks and shares ISA market value set to climb
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- Figure 28: Stocks and shares ISAs market, by value, 2007-17
- Figure 29: Forecast for the stocks and shares ISA market, by value, 2007-17
- Stocks and shares ISA volumes will struggle to see marked increases
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- Figure 30: Stocks and shares ISA market, by volume, 2007-17
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- Figure 31: Forecast for the stocks and shares ISA market, by volume, 2007-17
Market Share
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- Key points
- Lloyds Banking Group has almost a third of the cash ISA market…
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- Figure 32: Cash ISA provider, June 2012
- …but changes are on the horizon
- Banks hold two thirds of cash ISA balances
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- Figure 33: Cash ISA balances, by provider, April 2012
- Scottish Widows is the top fund manager, by value of funds under management
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- Figure 34: Top 15 unit trust/OEIC ISA fund managers, by value of funds under management, 2010-12
- Figure 35: Total ISA funds under management, January/April 2012
Companies and Products
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- Barclays
- Fidelity Worldwide Investments
- Santander UK
- Invesco Perpetual
- Legal & General
- Lloyds Banking Group
- Nationwide
- RBS Group
Brand Communication and Promotion
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- Key points
- Cash ISAs dominate adspend
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- Figure 36: Total advertising expenditure on ISAs, by product category, 2008-12
- Adspend follows a seasonal trend
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- Figure 37: Average monthly adspend on ISAs as a percentage of annual adspend, 2011
- Press and TV are the favoured advertising media
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- Figure 38: Adspend on cash ISAs, by media type, 2010-12
- Internet gains importance
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- Figure 39: Adspend on other investment ISAs, by media type, 2010-12
- Lloyds TSB tops ISA adspend
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- Figure 40: Top 15 ISA advertisers, 2010-12
Channels to Market
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- Key points
- Current account providers have edge in cash ISA market
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- Figure 41: ISA product holding and cross-sales, July 2012
- Figure 42: Channel most used to access savings account, by type of account held, February 2011
- Stocks and shares ISAs channels to market
- Key channels to market for stocks and shares ISAs
- Fund platforms account for majority of sales
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- Figure 43: Gross retail ISA sales, by sector and distribution channel, October 2011-May 2012
- RDR set to impact stocks and shares ISA sales
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- Figure 44: Number of advised and non-advised ISA sales, 2007-Q1 2011
Savings and Investment Ownership
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- Key points
- Some 37% of people own an ISA
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- Figure 45: Savings and investment product ownership, June 2012
- ISA ownership notably higher in the over-45s
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- Figure 46: Most popular savings and investment product ownership, by age, June 2012
- ISA owners have above-average ownership of pensions and other savings accounts
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- Figure 47: Savings and investment product ownership, by most popular savings and investment product ownership, June 2012
- Stocks and shares ISA owners keen on a broad portfolio of products
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- Figure 48: Savings and investment product ownership, by next most popular savings and investment product ownership, June 2012
Cash ISA Providers
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- Key points
- LBG tops the cash ISA provider charts
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- Figure 49: Cash ISA provider, June 2012
- Nationwide is punching above its weight in the cash ISA market
- Nationwide proves popular with fixed term/notice cash ISA holders
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- Figure 50: Cash ISA provider, by type of ISA, June 2012
ISA Transfer Activity
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- Key points
- Only 12% of ISA holders switched provider in the last year
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- Figure 51: ISA transfer activity, June 2012
- Transferring stocks and shares ISA is a complex process
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- Figure 52: ISA transfer activity, by savings and investment product ownership, June 2012
- Fixed-term cash ISA holders are more likely to shop around for a good deal…
- A focus on retention
- …but those that did are motivated by better rates
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- Figure 53: Motivators for changing provider, June 2012
- Those who transfer their ISA are more engaged in personal finance generally
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- Figure 54: Savings and investment product ownership, by ISA transfer activity, June 2012
- Santander attracts ISA switchers
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- Figure 55: Cash ISA provider, by ISA transfer activity, June 2012
Reasons for Saving and Investment
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- Key points
- Desire for financial security drives savings and investing habits
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- Figure 56: Reasons for saving, June 2012
- Peace of mind savers generally have above-average savings and investment product ownership
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- Figure 57: Savings and investment product ownership, by most popular reasons for saving, June 2012
- Cash ISAs are popular savings vehicles for major purchases
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- Figure 58: Savings and investment product ownership, by next most popular reasons for saving, June 2012
- ISA switchers are more likely to look for tax-efficient benefits
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- Figure 59: Reasons for saving, by ISA transfer activity, June 2012
Appendix – Market Size
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- Figure 60: Total ISA market, by value, 2012-17
- Figure 61: Cash ISA market, by value, 2012-17
- Figure 62: Stocks and shares ISA market, by value, 2012-17
- Figure 63: Total ISA market, by volume, 2012-17
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- Figure 64: Cash ISA market, by volume, 2012-17
- Figure 65: Stocks and shares ISA market, by volume, 2012-17
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Appendix – Savings and Investment Ownership
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- Figure 66: Most popular savings and investment product ownership, by demographics, June 2012
- Figure 67: Next most popular savings and investment product ownership, by demographics, June 2012
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- Figure 68: Other savings and investment product ownership, by demographics, June 2012
- Figure 69: Savings and investment product ownership, by demographics, June 2012
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Appendix – Cash ISA Provider
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- Figure 70: Most popular cash ISA provider, by demographics, June 2012
- Figure 71: Next most popular cash ISA provider, by demographics, June 2012
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Appendix – ISA Transfer Activity
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- Figure 72: ISA transfer activity, by demographics, June 2012
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Appendix – Reasons for Saving and Investing
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- Figure 73: Most popular reasons for saving, by demographics, June 2012
- Figure 74: Next most popular reasons for saving, by demographics, June 2012
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- Figure 75: Reasons for saving, by most popular savings and investment product ownership, June 2012
- Figure 76: Reasons for saving, by next most popular savings and investment product ownership, June 2012
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- Figure 77: Reasons for saving, by other savings and investment product ownership, June 2012
- Figure 78: Cash ISA provider, by most popular reasons for saving, June 2012
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- Figure 79: Cash ISA provider, by next most popular reasons for saving, June 2012
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