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Published by: Mintel International Group Ltd.
Published: Aug. 1, 2009 - 103 Pages
Table of Contents
- Issues in the Market
- Key issues
- Market definitions
- Abbreviations
- Market in Brief
- ISA penetration increases
- Subscriptions are also up
- Wider savings environment
- New industry developments
- Provider rankings
- ISA distribution mix
- Advertising activity
- The typical ISA subscriber is an AB aged 45+
- Saver behaviour
- Saver attitudes
- Internal Market Environment
- Key points
- Recent changes to simplify the scheme…
- Figure 1: Recent and proposed changes to the ISA scheme, 2004-20
- … have been welcomed by the investment industry…
- … but there’s still scope for improvement say some
- Allowance upped
- New scheme structure
- Figure 2: Illustration of annual investment limits, 2009/10 versus 2010/11
- ISA transfers to be speeded up
- Tax relief on equity ISAs a red herring?
- Calls to reinstate 10% tax credit
- Broader Market Environment
- Key points
- Summary of the main market and macroeconomic developments
- Less appetite for spending
- Implication
- With interest rates slashed, savers suffer reduced returns
- Figure 3: Average annual changes in the bank base rate, CPI and RPI - UK, 2000-09
- Implications for savers
- Stockmarket turmoil - have we passed the bottom?
- Figure 4: FTSE 100 and FTSE All Share - daily index movements, May 2000-May 2009
- Implication for investors
- The crunch effect
- Number of higher-rate taxpayers declined in 2008/09
- Figure 5: Number of basic and higher-rate taxpayers, 1998/99-2008/09
- Insight and implication
- Another target group, the over-50s, are growing in number
- Figure 6: Size of the UK population, by age group, 1999-2013
- Insight and implication
- Competitive Context
- Key points
- ISAs complement other savings and investment products
- Cash ISAs are the second-most popular savings and investment product
- Figure 7: Penetration of ISAs and other savings and investment products, April 2009
- Measuring the cash ISA gap
- Market inhibitors
- Cash ISA rates fare poorly against taxable accounts
- Investors shift in favour of bonds
- Strengths and Weaknesses in the Market
- Figure 8: ISAs - strengths, weaknesses, opportunities and threats, 2009
- MARKET SIZE AND FORECAST
- Key points
- £220 billion held in ISAs
- Figure 9: Value of funds held in ISAs, 2004-08
- New ISA subscriptions rose 5% in 2008/09
- Figure 10: Number of ISA accounts and amounts subscribed, 1999-2000-2008/09
- Insight and implication
- Cash ISA subscriptions increased in 2009/10, while equity ISA subscriptions fell
- Figure 11: Number of ISA accounts and amounts subscribed, segmented by type, 1999-2000-2008/09
- Implication
- Average subscription to equity ISA remained at previous year’s level
- Figure 12: Average subscription per account, 1999-2000-2008/09
- 2008 saw ISA investors become more cautious
- Figure 13: Total net retail unit trust/OEIC sales and net retail ISA sales, 2004-08
- Confidence returning?
- Winners and losers
- ISA market forecast: A mixed bag
- Figure 14: Forecast of new ISA business, by component, 2008/09-2013/14
- Factors incorporated
- MARKET SHARE
- Key points
- Cash ISA market has seen some new entrants over the past couple of years
- M&A activity shakes up the cash ISA rankings
- Figure 15: Provider share of cash ISA customer base, April 2009
- Government-backed providers have grown share
- Figure 16: Top 11 cash ISA providers, by customer share (rebased), 2009
- Insight and implication
- Building societies fare well in the cash ISA market
- Figure 17: Share of cash ISA balances outstanding, by main types of provider, March 2009
- Leading ISA fund managers
- Fidelity tops ISA fund rankings
- Figure 18: Top 15 unit trust/OEIC ISA fund managers, by value of funds under management,
- 2007-09
- Steady consolidation
- COMPANIES AND PRODUCTS
- SELECTED COMPANY PROFILES
- Fidelity
- Legal & General
- Lloyds Banking Group
- Nationwide Building Society
- RBS Group
- Grupo Santander
- BRAND COMMUNICATION AND PROMOTION
- Key points
- Many ISA providers cut back their ISA advertising in 2008/09
- Figure 19: Total advertising expenditure on ISAs, by product category, 2004/05-2008/09
- Insight and implication
- Figure 20: Average monthly adspend on ISAs as a percentage of annual adspend, 2008
- The press is the preferred media channel
- Figure 21: Proportional distribution of adspend on ISAs, by main media, 2004/05-2008/09
- Halifax maintains position as largest ISA advertiser
- Figure 22: Top 15 ISA advertisers, 2007/08 and 2008/09
- CHANNELS TO MARKET
- Key points
- Cash ISAs are predominately sold direct to consumers
- IFAs are the top advice source for equity ISA investors
- Figure 23: Preferred sources of investment advice, by cash and equity ISA holders, April 2009
- Equity ISAs: the main routes to market
- All channels experienced a decline in gross ISA fund sales in 2008
- Figure 24: Gross retail sales of unit trust and OEIC ISAs, by distribution channel, 2004-08
- Insight and implication
- Fund supermarkets continue to be the dominant sales channel
- Figure 25: Proportional representation of gross retail unit trust and OEIC ISA sales, by channel, 2004-08
- The rise of the fund supermarkets
- What they offer
- The leading fund platforms
- THE CONSUMER - VALUE OF INVESTIBLE ASSETS
- Key points
- Survey background
- Half of UK adults have some level of savings
- Figure 26: Value of savings and other investible assets, April 2009
- Wealth increases with age
- Figure 27: Value of savings and other investible assets, by age, April 2009
- Insight and implication
- One in four ABs are in the affluent to HNW category
- Figure 28: Value of savings and other investible assets, by gender and socio-economic group, April 2009
- THE CONSUMER - ISA OWNERSHIP
- Key points
- Cash ISA is the second most popular savings product
- Figure 29: Savings and investment products owned, by age, April 2009
- Consumers favour fixed-rate products
- Take-up of ISAs has increased over the past year…
- Figure 30: Change in ISA penetration between 2008 and 2009
- Insight and implication
- …but there’s scope to expand the market further
- Figure 31: ISA gap assessment, April 2009
- Insight and implication
- 55-64-year-olds use ISAs the most
- Figure 32: Savings and investment products owned, by age, April 2009
- Insight and implication
- Gender variation
- Figure 33: Savings and investment products owned, by gender and socio-economic group, April 2009
- Insight and implication
- ABs really like ISAs
- Insight and implication
- Personal wealth is a key determiner of ISA ownership
- Figure 34: Savings and investment products owned, by level of investible assets, April 2009
- Insight and implication
- CHAID analysis identifies older ABs as the main target group for ISAs
- Figure 35: Target groups identified for the ISA market, April 2009
- THE CONSUMER - INVESTOR BEHAVIOUR
- Key points
- Around one in four contributed the maximum to their cash ISA
- Figure 36: Agreement with statements about ISA usage, April 2009
- Insight and implication
- Some customer churn
- Insight and implication
- More make regular payments than deposit lump sums
- Insight and implication
- Over a fifth of savers withdrew money from their cash ISA in 2008/09
- Figure 37: Agreement with awareness statement, April 2008
- Regular saver products will appeal most to the under-35s
- Figure 38: Agreement with statements about ISA usage, by age, April 2009
- Insight and implication
- Men are much more inclined to deposit lump sums into their cash ISA
- Figure 39: Agreement with statements about ISA usage, by gender and socio-economic group, April 2009
- APPENDIX - OWNERSHIP OF ISAS
- Figure 40: Ownership of cash and equity ISAs, by demographic, April 2009
- APPENDIX - DEMOGRAPHIC PROFILE OF ISA SUBSCRIBERS
- Figure 41: Demographic profile of cash and equity ISA subscribers, April 2009
- APPENDIX: RESEARCH METHODOLOGY
AbstractOvercoming the fear of investing in ISAs
The ISA market has seen steady growth over the past few years, which has boosted balances. Over 18 million UK adults hold cash or investments in ISAs - assets that are collectively worth over £220 billion. However, a much larger number have savings held outside the ISA wrapper, indicating that there is still scope to expand the market.
With a penetration of 33% among UK adults aged 18+, cash ISAs continue to be much more popular than stocks and shares ISAs. Although take-up of the latter increased in 2008/09, this was largely due to the transfer of PEP funds into ISAs at the start of the tax year, while the value of new subscriptions to stocks and shares ISAs fell by 10% in 2008/09. In contrast, new subscriptions to cash ISAs rose by 11%, boosted by the increase in the cash ISA limit and investors seeking refuge from the turmoil in the stock markets brought about by the banking crisis.
This report examines the impact of the financial crisis and ensuing economic downturn on the shape and size of the ISA market, drawing on a range of data sources. The market overview analysis is complemented by the results of Mintel’s consumer survey, which provide additional insight into patterns of product ownership, as well as attitudes and behaviours towards ISA products.
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