With four in 10 people familiar with the new ISA rules telling us they will save more money as a result, we call on savings providers to do more to help their customers get the best deal.
As the Government’s ISA reforms come into effect today, new Which? research reveals 40% of those who know all about the changes say they will encourage them to save more money and over half (54%) say the changes will prompt them to shop around for the best ISA deals.
ISA switching is currently very low as more than half (55%) of those with an instant-access cash ISA, and four in ten (42%) of those with a notice cash ISA, have never switched, but these reforms should help encourage people to look for a better deal.
Separate research found half (50%) admit they could save more than they do, and currently just 12% of people are planning to save more in the next year.
However, around a third (36%) of people still haven’t heard of the changes, making it vital providers give their customers clear, timely information about the changes and their current interest rates to encourage people to shop around. They must also inform savers who took out a fixed-rate ISA earlier this year of the deadline for topping it up.
Which? is calling on providers to ‘Scrap the savings trap’ and stop limiting transfers into their new ISAs. In April 2014, we found just 72% of instant-access cash ISAs allowed transfers in – down from 88% in 2012. If providers do not allow transfers in, there is a risk that people won’t be able to get the best deal and their savings will be stuck in accounts paying poor rates of interest.
We also want all providers to be required to take part in the automated ISA switching service which is currently only used in around six in 10 transfers, and the Financial Conduct Authority to take over the regulation of the switching guidelines. This will make it quicker and easier for people to move their money to a better deal.
Chancellor of the Exchequer George Osborne said:
“We want to support savers at all stages of their life and make sure they have greater flexibility and choice over how they access their savings. Today’s introduction of the new ISAs is a big boost for millions of people, giving them greater economic security by putting aside money in savings.”
Which? executive director, Richard Lloyd, said:
“The Government’s reforms are good news for existing savers and they will also encourage more people to save, but the benefits will be undermined if providers don’t help savers get the best rates. It’s now over to the banks to help their customers make the most of their money. Providers should clearly notify their customers of their interest rates and the changes, make switching easier, and stop limiting transfers in.”
Notes to editors:
1. Research on reforms: Populus, on behalf of Which?, interviewed a representative sample of 2073 UK adults online between 25th and 26th June 2014. Data were weighted to be demographically representative of all UK adults. Populus is a member of the British Polling Council and abides by its rules.
2. Research on saving habits: Populus, on behalf of Which?, surveyed a representative sample of 4,170 UK adults online between 18th and 22nd December 2013. Data were weighted to be demographically representative of all UK adults. Populus is a member of the British Polling Council and abides by its rules.
3. Consumer Insight Tracker (data on percentage planning to save more): Populus, on behalf of Which?, interviewed a representative sample of 2110 UK adults online between 23rd and 26th May 2014. Data were weighted to be demographically representative of all UK adults. Populus is a member of the British Polling Council and abides by its rules.
4. ISA transfers in: Which? looked at the number of instant access ISAs accepting transfers in at April 2014 and November 2012.
5. The Office of Fair Trading found only 58% of cash ISA transfers in 2013 used the new automated switching service.
6. Many savings providers have confirmed they will be allowing ISA top-ups throughout July, with some extending the top-up period to the end of the tax year. To check your provider’s deadline, visit the Which? website.