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Description

Description

“Although certain aspects of the product need reworking, the LISA is the most promising of the new ISA products that have been introduced in recent years. Getting on to the housing ladder remains a key priority for young people and many will be eager to take full advantage of the generous incentives attached to the account. Currently no major bank or building society offers it, but this should change with the closure of the Help to Buy ISA.”
– George Zaborowski, Senior Financial Services Analyst

This report looks at the following areas:

  • Innovative Finance ISAs were always destined to be a niche product
  • A back-to-basics approach may be needed to simplify the ISA market

What's included

What's included

Table of contents

Table of contents

  1. Overview

    • What you need to know
      • Products covered in this Report
      • Executive Summary

          • The market
            • The value of ISA subscriptions grew by 13% in 2017/18
              • Figure 1: Number of ISAs and amount subscribed, 2011/12-2017/18
            • Cash ISA segment projected to stagnate
              • Figure 2: Forecast of total cash ISA subscriptions, 2013/14-2023/24
            • Stocks and shares ISA contributions forecast to experience continued growth
              • Figure 3: Forecast of total stocks and shares ISA subscriptions, 2013/14-2023/24
            • Savings ratio being depressed by low rates paid on savings accounts
              • Figure 4: Average monthly quoted cash ISA variable and fixed rate, 31 August 2015-31 August 2019
            • Innovative finance ISA facing increased regulatory pressure
              • Companies and brands
                • Nationwide remains the top cash ISA provider
                  • Figure 5: Ranking of cash ISA providers, by proportion of ISA holders, February 2019
                • Hargreaves Lansdown the biggest provider of stocks and shares ISAs
                  • Figure 6: Top 10 investment ISA providers, by ISA funds under management, May 2018 and May 2019
                • Overall ISA adspend rises by 69%
                  • Figure 7: Total above-the-line, online display and direct mail advertising on ISAs, 2014/15-2018/19
                • The consumer
                  • ISA ownership is widespread among UK adults
                    • Figure 8: Savings product ownership, August 2019
                  • ISA contributions most heavily concentrated at values below £5,000
                    • Figure 9: Value of contributions into any ISA product in the 12 months to April 2019, August 2019
                  • Around a third of account holders use their ISA for most or all their savings
                    • Figure 10: Proportion of savings and investment funds contributed into an ISA, August 2019
                  • Earning returns tax-free remains the most common reason for opening an ISA
                    • Figure 11: Reasons for opening an ISA, August 2019
                  • Cash ISAs viewed by most ISA owners as less attractive than a few years ago
                    • Figure 12: Attitudes towards ISAs, August 2019
                  • What we think
                  • Issues and Insights

                    • Innovative Finance ISAs were always destined to be a niche product
                      • The facts
                        • The implications
                          • A back-to-basics approach may be needed to simplify the ISA market
                            • The facts
                              • The implications
                              • The Market – What You Need to Know

                                • The overall value of ISA subscriptions rose by 13% in 2017/18
                                  • Continued growth in stocks and shares ISA contributions projected
                                    • Savings ratio remains near historic low
                                      • Innovative finance ISA coming under increased regulatory scrutiny
                                      • Market Size

                                        • The value of ISA subscriptions rose by 13% in 2017/18
                                          • Figure 13: Number of ISAs and amount subscribed, 2011/12-2017/18
                                        • Value of stocks and shares ISA contributions up by 29%
                                          • Figure 14: Number of ISAs and amounts subscribed, by component type, 2011/12-2017/18
                                        • Average subscription values for stocks and shares now over £10,000
                                          • Figure 15: Average subscription per account, by component type, 2011/12-2017/18
                                        • OEICs the most common type of stocks and shares investment
                                          • Figure 16: Value of funds held in adult ISAs, by type of investment, 2013/14-2017/18
                                        • £517 million contributed to Lifetime ISAs in the first year
                                          • Figure 17: Value of lifetime and innovative finance ISAs subscriptions, 2017/18
                                        • Note about change to HMRC ISA statistics release schedule
                                        • Market Forecast

                                          • Cash ISA subscription levels projected to remain flat over next five years
                                            • Figure 18: Forecast of total cash ISA subscriptions, 2013/14-2023/24
                                            • Figure 19: Forecast of total cash ISA subscriptions, 2013/14-2023/24
                                          • Stocks and shares ISA subscriptions could reach £43 billion by 2023/24
                                            • Figure 20: Forecast of total stocks and shares ISA subscriptions, 2013/14-2023/24
                                            • Figure 21: Forecast of total stocks and shares ISA subscriptions, 2013/14-2023/24
                                          • Forecast methodology
                                          • Market Drivers

                                            • Savings ratio continues to hover near historic low
                                              • Figure 22: UK household national accounts savings ratio and cash basis savings ratio, at current prices and seasonally adjusted, Q1 2015-Q1 2019
                                            • Low cash ISA rates have made stocks and shares ISAs more attractive
                                              • Figure 23: Average monthly quoted cash ISA variable and fixed rate, 31 August 2015-31 August 2019
                                            • Overabundance of ISA product options may be causing confusion
                                            • Regulatory and Legislative Environment

                                              • Help to Buy ISA closed to new applicants from 30 November 2019
                                                • Government urged to lift LISAs transfer limits for H2B ISA holders
                                                  • Innovative finance ISAs could be on their way out
                                                    • New rules will restrict investor access to P2P investments
                                                      • FCA proposes ban on investment platform exit fees
                                                      • Companies and Brands – What You Need to Know

                                                        • Nationwide the leading cash ISA provider…
                                                          • …while Hargreaves Lansdown leads in stocks and shares
                                                            • Most notable company activity taking place on the investment side
                                                              • Big banking brands yet to enter the LISA market
                                                                • Overall ISA adspend rises by 69%
                                                                • Market Share

                                                                  • Major high street brands dominate cash ISA market
                                                                    • Figure 24: Ranking of cash ISA providers, by proportion of ISA holders, March 2018 and February 2019
                                                                  • Fidelity is the largest stocks and shares ISA provider among IA members
                                                                      • Figure 25: Top 10 investment ISA providers, by ISA funds under management, May 2018 and May 2019
                                                                  • Competitive Strategies and Innovation

                                                                    • Major high street brands still not offering Lifetime ISAs
                                                                      • Skipton Building Society launches ‘special edition’ tracker cash ISA
                                                                        • Stocks and shares ISA and IFISA competitive strategies
                                                                          • Goldman Sachs set to enter ISA market via digital-only Marcus brand
                                                                            • Hargreaves Lansdown acquires 33,000 ISA clients from JPMorgan
                                                                              • Hargreaves Lansdown scraps exit fees
                                                                                • Vitality enters the ISA market
                                                                                  • Nutmeg adds drip-feed option into its stocks and shares ISA
                                                                                    • Orca Money launches IFISA offering access to multiple P2P lenders
                                                                                    • Advertising and Marketing Activity

                                                                                      • Total adspend on ISAs rises by 69%
                                                                                        • Figure 26: Total above-the-line, online display and direct mail advertising on ISAs, 2014/15-2018/19
                                                                                      • Nationwide responsible for a third of all cash ISA adspend
                                                                                        • Figure 27: Top 10 recorded above-the-line, online display and direct mail advertisers of cash ISAs, 2014/15-2018/19
                                                                                      • Fidelity remains the biggest advertiser of stocks and shares ISAs
                                                                                        • Figure 28: Top 10 recorded above-the-line, online display and direct mail advertisers of stocks and shares ISAs, 2014/15-2018/19
                                                                                      • Just over a third of adspend is put towards press advertising
                                                                                        • Figure 29: Total above-the-line, online display and direct mail advertising expenditure on ISAs, by media type, 2018/19
                                                                                      • Nielsen Ad Intel coverage
                                                                                      • The Consumer – What You Need to Know

                                                                                        • Most UK savers own an ISA product
                                                                                          • Contributions into ISAs tend to be below £5,000 a year
                                                                                            • Tax-free returns remain the top reason for opening an ISA
                                                                                              • 64% agree that cash ISAs are less attractive than in the past
                                                                                              • Savings Product Ownership

                                                                                                • Seven in 10 UK savers own an ISA product
                                                                                                  • One in four savers have a stocks and shares ISA
                                                                                                    • Figure 30: Savings and investment product ownership, August 2019
                                                                                                  • 12% of eligible savers own a Lifetime ISA
                                                                                                  • ISA Savings Activity

                                                                                                    • One in four ISA holders contributed £5,000 or more in 2018/19
                                                                                                      • Figure 31: Total value of contributions into any ISA product during the 2018/19 tax year, August 2019
                                                                                                    • Contribution levels highest among 25-44 year olds
                                                                                                      • Figure 32: Total value of contributions into any ISA product during the 2018/19 tax year, by age, August 2019
                                                                                                    • Over a third use their ISA for all or most of their savings
                                                                                                      • Figure 33: Proportion of overall savings and investment funds contributed into an ISA, August 2019
                                                                                                    • Cash ISA contributions are prioritised over stocks and shares
                                                                                                      • Figure 34: Prioritisation of ISA contributions, by type of ISA, August 2019
                                                                                                  • Reasons for Owning an ISA

                                                                                                    • Tax-free earnings the top reason for opening an ISA
                                                                                                      • Figure 35: Reasons for opening an ISA, August 2019
                                                                                                    • Two fifths of under-35s opened an ISA to save for a house
                                                                                                      • Figure 36: Reasons for opening an ISA, by age, August 2019
                                                                                                    • Most only have one or two reasons for opening an ISA
                                                                                                      • Figure 37: Repertoire of reasons for opening an ISA, August 2019
                                                                                                      • Figure 38: Repertoire of reasons for opening an ISA, by reasons for opening an ISA, August 2019
                                                                                                  • Attitudes and Behaviour towards ISAs

                                                                                                    • Two thirds of ISA holders like to keep an eye out for the best deals
                                                                                                      • Most perceive cash ISAs to be less attractive
                                                                                                        • Figure 39: Attitudes towards ISAs, August 2019
                                                                                                      • 73% of under-35s say they are regularly contributing to their ISA
                                                                                                        • Figure 40: Agreement with the statement “I contribute to my ISA(s) on a regular basis”, by age, August 2019
                                                                                                    • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                        • Abbreviations
                                                                                                          • Consumer research methodology
                                                                                                          • Appendix – Market Size and Forecast

                                                                                                            • Best- and worst-case forecasts for cash ISA subscription value
                                                                                                              • Figure 41: Best- and worst-case forecasts for total adult cash ISA subscriptions, at current prices, 2018/19-2023/24
                                                                                                            • Best- and worst-case forecasts for stocks and shares ISA subscription value
                                                                                                              • Figure 42: Best- and worst-case forecasts for total stocks and shares ISA subscriptions, at current prices, 2018/19-2023/24
                                                                                                            • Forecast methodology

                                                                                                            This market report provides in-depth analysis and insight supported by a range of data. At the same time, introductory and top-level content is provided to give you an overview of the issues covered.

                                                                                                            • Market

                                                                                                              Mintel provides a range of market information, frequently through the category level, including market size and forecasting, complete with market drivers that illustrate the forces that shape a category or market.

                                                                                                            • Consumer

                                                                                                              Mintel's proprietary consumer research provides our analysts with the attitudinal and behavioral data used to provide valuable insight to topical issues.

                                                                                                            • Brand/Company

                                                                                                              Mintel provides overviews of the top brands and manufacturers, and uses consumer research to explore attitudes and reactions to brands, as well as insight into what will resonate with consumers.

                                                                                                            • Data

                                                                                                              Market reports provide appendices of data to support the research and insight produced. Our tables of data are easily manipulated and downloadable to support your research needs and covers factors from consumer attitudes to market forecasts.

                                                                                                            Please Note: This is a sample report. All of the figures, graphs, and tables have been redacted.

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