The one-year fixed-rate Isa – issue 43 – has a 1.75 per cent gross/annual equivalent rate until 31 March 2014 and interest is paid on maturity on the same date. It has a minimum investment of £1 and a maximum investment of £5,640 – the 2012/2013 tax year allowance – plus previous years’ Isa subscriptions.
It is available to Isa subscriptions invested in previous years while the product remains open for further investments.
Unlimited withdrawals of up to 25 per cent of the initial investment can be made without notice or loss of interest at any time, but if further withdrawals are made or the account is closed the account will be subject to 90 days loss of interest.
The two-year fixed-rate Isa – issue 41 – is available at 1.95 per cent fixed until 31 March 2015. The interest is paid annually on 31 March, commencing on 31 March 2014 and on maturity – 31 March 2015.
There is a minimum investment of £1 and a maximum investment of £5,640. It is available to Isa subscriptions invested in previous tax years, while the product remains open for further investments and unlimited withdrawals of up to 25 per cent of the initial investment can be made without notice or loss of interest at any time. If further withdrawals are made or the account is closed the account will be subject to 120 days loss of interest.
The society said that the products have the “flexibility and peace of mind” that comes with access to 25 per cent of the funds without notice or penalty at any time, which is unusual for fixed-rate savings deals, and allow transfers in from other providers.
REACTIONS
PROVIDER VIEW
Kim Rebecchi, sales and marketing director for Leeds Building Society, said: “This new suite of tax-free products offers the combination of a good rate of return coupled with the peace of mind provided by access to some of the funds at any time, without notice or penalty. These products are available to savers who have not used their 2012/2013 tax year Isa allowance of £5,640. Our new offers also allow transfers in from other providers so customers can, if they wish, make life easier by having all their tax-free savings in one place. I anticipate these fixed-rate Isas will be popular. They are available to open on a first-come, first-served basis by post, online and in branch.”
ADVISER VIEW
Jock Cassidy, director of Middlesex-based Ashley Law in the UK said: “These rates are unremarkable, and in fact you could receive more than that – 2 per cent and over – from a number of building society accounts, although obviously these do not have the same Isa benefits overall. They may appeal to existing Leeds Building Society clients, as they are in the same ballpark as other building society rates, but we have noticed that, despite the added risks of equities Isas, consumers are becoming increasingly disenchanted with low rates like this and are looking out of exasperation to other instruments for better returns.”
CHARGES
There is no charge associated with the Leeds Building Society Isa.
VERDICT
Providers are going to have a struggle on their hands in persuading people to save in an Isa this year. Rates are still very low and investors are still wary of investing when the returns are so poor. Banks and building societies will have to do something spectacular to persuade investors to part with their money. This year’s Isa season is not looking very hopeful.
