Table of Contents
Introduction
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- Product definitions
- Abbreviations
Executive Summary
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- The market
- The market should continue to grow, boosted by increases in the annual allowance
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- Figure 1: Forecast of total adult ISA subscriptions, at current prices – fan chart, 2007/08-2017/18
- Sub-sector performance
- Value of ISA assets continues to grow
- Market factors
- Tough savings environment
- Measly returns on cash
- Low risk tolerance inhibits growth in the equity ISA sector
- Recent market developments
- Companies, brands and innovation
- Lack of incentive to innovate
- Leading ISA providers
- Online account management has become the favoured channel for cash ISA holders
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- Figure 2: Channel most used to access cash ISA, January 2013
- Fund platforms responsible for the lion’s share of equity ISA sales
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- Figure 3: Gross retail ISA OEIC and unit trust sales, by distribution channel, 2012/13
- ISA providers cut back on adspend
- The consumer
- More than three times as many hold a cash ISA as hold an equity ISA
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- Figure 4: Ownership of ISAs and other common savings and investments, June 2013
- Saving ability under pressure
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- Figure 5: Current level of saving activity, June 2013
- Strong public support for ISA allowance parity
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- Figure 6: Agreement with statements about the annual ISA limits and the wider saving and investment environment, June 2013
- Future ISA investment intentions
- What we think
Issues in the Market
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- What is the size of the ISA gap?
- How is the wider savings environment impacting on the market?
- How much customer churn is there?
- What proportion of savers believe now is a good time to invest in equity?
- To what extent are people able to save?
- What proportion of ISA customers use their whole ISA allowance?
- And what support is there for parity between cash and equity ISAs?
Trend Application
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- Trend: Life Hacking
- Trend: Prove It
- Mintel’s futures: Old Gold
Market Drivers
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- Key points
- ISA limits raised, but by less than half the amount in the previous tax year
- AIM shares added to the list of eligible investments for ISAs
- Government consults on allowing CTF to Junior ISA transfers
- Savers continue to lose out from a low base rate and above-target inflation
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- Figure 7: Average annual changes in the Bank of England base rate, CPI and RPI – UK, 2004-13
- Cash ISAs offer better rates of return than their taxable equivalents
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- Figure 8: Average monthly quoted cash deposit and ISA interest rates, January 2008-June 2013
- Cash ISA rates have fallen since the introduction of the FLS
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- Figure 9: Average monthly quoted cash ISA (variable) rate, January 2011-June 2013
- Assessing the tax benefit of ISAs for equity investors
- More taxpayers are drawn into the higher tax bracket
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- Figure 10: Number of basic and higher-rate taxpayers, 2010/11-2013/14
- Relatively stable saving ratio
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- Figure 11: Gross household saving and annual saving ratio, seasonally adjusted and at current prices, 2001-12
- Retail deposits grew modestly in 2012
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- Figure 12: Retail savings balances, by sector, 2003-12
- Saving confidence continues to deteriorate
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- Figure 13: Saving and spending confidence, June 2004-June 2013
- Demand for ISAs has fallen over the past year
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- Figure 14: ISA intentions versus pension intentions, Q3/Q4 2002-Q2/Q3 2013
- Improved stockmarket performance…
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- Figure 15: FTSE 100, FTSE All Share and FTSE AIM All Share – daily index movements, January 2006-July 2013
- …and yet demand for investment fund ISAs fell in the previous tax year
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- Figure 16: Net retail unit trust/OEIC ISA sales, 2007/08-2012/13
- Outlook for equity investment
Market SWOT Analysis
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- Figure 17: ISAs – strengths, weaknesses, opportunities and threats, 2013
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Who’s Innovating?
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- Key points
- Reduced product choice and incentive to innovate
- This ISA season’s main product launches – get them while you can!
- Summer 2013 launches
- Scottish Friendly adopts a ‘new’ approach in the equity ISA market
- Triodos launches two SRI funds as part of its ethical equity ISA
Market Size and Forecast
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- Key points
- Recent growth in ISA subscriptions driven by hikes in the annual allowance
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- Figure 18: Number of ISAs and amounts subscribed, 2005/06-2012/13
- Cash ISAs outnumber stocks and shares ISAs by four to one
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- Figure 19: Number of ISAs and amounts subscribed, segmented by component type, 2005/06-2012/13
- Disparity in ISA limits means the average amount subscribed to an equity ISA is much higher than a cash ISA
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- Figure 20: Average subscription per account, 2005/06-2012/13
- Introduction of Junior ISAs
- Steady growth trend is forecast to continue
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- Figure 21: Forecast of total adult ISA subscriptions, at current prices – fan chart, 2007/08-2017/18
- Figure 22: Forecast of total adult ISA subscriptions, 2012/13-2017/18
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- Figure 23: Forecast of new adult ISA business, by component, at current prices, 2012/13-2017/18
- Forecast methodology
- Fan chart explanation
Value of ISA Funds
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- Key points
- £391 billion held in adult ISAs
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- Figure 24: Value of funds held in adult ISAs, by type of investment, 2008-12
- OEICs and unit trusts offer an easy way in to the stock market
Market Share
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- Key points
- Halifax is the leading brand in the retail savings account market
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- Figure 25: Ranking of largest providers of cash ISAs and other savings accounts, by proportion of customers, January 2013
- Building societies punch above their weight in the cash ISA market…
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- Figure 26: Cash ISA balances, by type of provider, June 2013
- …but are facing mounting pressure from their banking rivals
- Provider rankings based on overall retail savings balances
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- Figure 27: Providers’ total retail savings balances, shown on a group basis – UK, 2010-12
- ISA fund managers
- Two LBG subsidiaries lead in the equity ISA market
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- Figure 28: Top ten unit trust/OEIC ISA providers, by value of funds under management, 2011-13
Companies and Products
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- Lloyds Banking Group
- Description
- Ranking
- Distribution mix
- Product range
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- Figure 29: Lloyds Banking Group cash ISA range, July 2013
- Figure 30: Lloyds Banking Group investment ISA product range, July 2013
- Recent financial performance
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- Figure 31: Key annual financial data for Lloyds Banking Group, 2011 and 2012
- Brand positioning and strategy
- Recent activity
- Santander
- Description
- Ranking
- Distribution mix
- Product range
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- Figure 32: Santander’s ISA product range, July 2013
- Recent financial performance
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- Figure 33: Key annual financial data for Santander UK, 2011 and 2012
- Brand positioning and strategy
- Recent activity
- Nationwide
- Description
- Ranking
- Distribution mix
- Product range
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- Figure 34: Nationwide’s ISA product range, July 2013
- Recent financial performance
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- Figure 35: Key financial data for Nationwide Building Society, 2012 and 2013
- Brand positioning and strategy
- Recent activity
- Fidelity
- Description
- Ranking
- Distribution mix
- Product range
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- Figure 36: Fidelity’s ISA product range, July 2013
- Recent financial performance
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- Figure 37: Key financial data for FIL Investment Services (UK), 2011 and 2012
- Brand positioning and strategy
- Recent activity
Brand Communication and Promotion
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- Key points
- Sharp fall in ISA adspend
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- Figure 38: Total advertising expenditure on ISAs, by component type, 2009-13
- Significant seasonal variation in ISA adspend levels
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- Figure 39: Average monthly adspend on ISAs as a percentage of annual adspend, by component type, 2012
- Traditional bank brands steal a march on their mutual and former-mutual rivals
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- Figure 40: Top ten advertisers of cash ISAs, 2011-13
- Fidelity again tops the equity ISA advertiser rankings
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- Figure 41: Top ten advertisers of stocks and shares ISAs, 2011-13
- Cash ISAs are conducive to television advertising
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- Figure 42: Proportional distribution of ISA adspend, by media channel and component type, 2013
Channels to Market
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- Key points
- Cash ISAs are predominantly sold direct to consumers
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- Figure 43: Channel most used to access savings account, by type of account held, January 2013
- Intermediaries play a dominant role in the sale of equity ISAs
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- Figure 44: Gross retail ISA OEIC and unit trust sales, by distribution channel, 2012/13
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- Figure 45: Net retail ISA OEIC and unit trust sales, by distribution channel, 2007/08-2012/13
Ownership of ISAs, Other Savings and Investments
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- Key points
- Survey background
- Relatively stable ISA penetration
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- Figure 46: Ownership of ISAs and other savings and investments, June 2012 and June 2013
- Measuring the ISA gap
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- Figure 47: Ownership of ISAs and other savings and investments – cross-analysis, June 2013
Saving Activity and Other Financial Priorities
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- Key points
- Many people are saving less now than a year ago
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- Figure 48: Agreement with statements about saving activity and other financial priorities, June 2013
- ISA subscribers are generally in a stronger financial position
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- Figure 49: Agreement with statements about saving activity and other financial priorities, by ownership of ISAs, June 2013
ISA Limits and the Saving Environment
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- Key points
- Strong public support for ISA limit parity
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- Figure 50: Agreement with statements about the annual ISA limits and the saving and investment environment, June 2013
- Equity ISA holders are more bullish
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- Figure 51: Agreement with statements about the annual ISA limits and the saving and investment environment, by ISA holders, June 2013
- Low interest rates acting as a disincentive to save
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- Figure 52: Agreement with statements about the annual ISA limits and the saving and investment environment, by saving activity, June 2013
ISA Contribution and Transfer Intentions
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- Key points
- A much higher proportion of cash ISA holders intend to add to their savings than make a withdrawal
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- Figure 53: ISA contribution and transfer intentions over the next 12 months, by type of ISA held, June 2013
- One in five cash ISA holders are planning a transfer
- Equity ISA holders are less active than their cash counterparts
- Those who are struggling to save are likely to make a withdrawal
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- Figure 54: ISA contribution and transfer intentions over the next 12 months, by saving activity, June 2013
- Attitudes influence investment intentions
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- Figure 55: ISA contribution and transfer intentions over the next 12 months, by agreement with statements about the saving/investment environment, June 2013
Appendix – Market Size and Forecast
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- Total market forecast – best- and worst-case scenarios
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- Figure 56: Value of new adult ISA subscriptions – best- and worst-case scenarios, at current prices, 2012/13-2017/18
- Market forecast by sector
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- Figure 57: Value and volume of new adult ISA subscriptions, by component, at current prices, 2007/08-2017/18
- Cash component forecast
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- Figure 58: Forecast of cash ISA subscriptions, at current prices – fan chart, 2007/08-2017/18
- Figure 59: Forecast of cash ISA subscriptions, 2012/13-2017/18
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- Figure 60: Forecast of cash ISA subscriptions – best- and worst-case scenarios, at current prices, 2012/13-2017/18
- Stocks and shares forecast
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- Figure 61: Forecast of stocks and shares ISA subscriptions, at current prices – fan chart, 2007/08-2017/18
- Figure 62: Forecast of stocks and shares ISA subscriptions, 2012/13-2017/18
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- Figure 63: Forecast of stocks and shares ISA subscriptions – best- and worst-case scenarios, at current prices, 2012/13-2017/18
- Forecast methodology
- Fan chart explanation
Appendix – Market Background
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- Key milestones in the ISA story
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- Figure 64: Key changes to the ISA scheme, 2004-13
Appendix – Ownership of ISAs, Other Savings and Investments
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- Figure 65: Ownership of savings and investments, by demographics, June 2013
- Figure 66: Ownership of ISAs, by product type and demographics, June 2013
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Appendix – Saving Activity and Other Financial Priorities
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- Figure 67: Most popular agreement with statements about saving activity and other financial priorities, by demographics, June 2013
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Appendix – ISA Limits and the Saving Environment
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- Figure 68: Agreement with statement ‘It’s hardly worth saving at the moment because interest rates are so low’, by demographics, June 2013
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- Figure 69: Agreement with statement ‘It’s a good time to invest in the stock market’, by demographics, June 2013
- Figure 70: Agreement with statement ‘People should be able to save the full ISA limit of £11,520 in a cash ISA as they can in a stocks and shares ISA’, by demographics, June 2013
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Appendix – ISA Contribution and Transfer Intentions
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- Figure 71: ISA contributors and transfer targets over the next 12 months, by demographics, June 2013
- Figure 72: Cash ISA contribution and transfer intentions over the next 12 months, by demographics, June 2013
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- Figure 73: Other ISA contribution and transfer intentions over the next 12 months, by demographics, June 2013
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