Savers are clearly not convinced that the Isa products currently on the market are a good place for their money, according to the wealth manager MoneyFarm.
According to research carried out by digital wealth management company MoneyFarm fewer and fewer savers have been willing to open an individual savings account of any form as they are perceived to be offering poor returns at high fees.
Data released by HM Revenue & Customs has shown that slightly less than 13m Isas were opened in 2014 to 2015, a significant reduction on the 13.5m accounts opened in 2013 to 2014.
Over the last five years the number of Isas opened has fallen by 14 per cent, with the popularity of the accounts reaching its apex in 2010 to 2011 in which 15.2m Isas were opened.
The dramatic drop in the popularity of Isas comes in spite of the government’s decision to further increase the amount savers can put into a Cash or Stocks and Shares Isa to £15,240 for the 2015 to 2016 tax year.
According to the chairman of MoneyFarm, the data shows this part of the savings and investment market is long overdue improvements in product innovation and service levels.
Paolo Galvani, chairman and co-founder of MoneyFarm, said: “Savers are clearly not convinced that the Isa products currently on the market are a good place for their money.
“Isas have an important role to play in helping people look after and grow their savings, but these figures suggest savers are being underserved by existing market participants.”
“While Isas still have a strong appeal as accessible, tax-free savings wrappers, consumers are increasingly questioning the underlying quality of the product selection on offer.”
Despite the notable decrease in the number of Isas opened in 2014 to 2015 the total amount of money subscribed to Adult Isas has risen significantly.
HMRC’s data revealed that around £79bn was subscribed to Cash and Stocks and Shares Isas in 2014 to 2015, a notable increase on the £20bn subscribed in 2013 to 2014.
Adviser view
Sam Slator, head of communications at Chelsea Investment Intelligence, “From a company perspective we have seen little fluctuation in the number of people looking to open stocks and Shares Isas, which would lead me to believe that Cash Isas have become increasingly unpopular. The lack of interest in Cash Isas is surely the result of low interest rates, with people unwilling to continue investing in accounts that are providing them with very little return.”
