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Individual Savings Accounts in the UK - Key Trends and Opportunities to 2018

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Date: 05-Feb-2015
No. of pages: 71
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Synopsis

Interest rates are at their lowest levels since individual savings accounts (ISAs) began, which significantly reduces consumers' commitment to saving. As a result, consumers - those who can afford to save - are starting to opt either for stocks and shares accounts or deciding to pay off long-standing debts with higher interest rates.

The average rate offered on cash ISAs fell from 2.55% at the start of 2012 to 1.74% in February 2013, and to just 1.64% at the start of 2014. The average rates for savings accounts fell from 5.09% in 2008 and 1.48% in 2014, which highlights the impact of the recession and the availability of cheap funds for the banks.

Eight out of every 10 ISAs opened in FY2013-2014 were still cash ISAs however, as savers remained risk-averse, despite banks offering the worst interest rates on record. Stocks and shares ISAs are starting to recover however, following a substantial decline in the number for accounts from FY2010-2011 to FY2011-2012. The amount subscribed to stocks and shares ISAs has increased considerably since FY2009 - from GBP12.5 million to GBP18.4 million - which suggests that a smaller percentage of wealthier people, who can afford the increased risk, are filling these ISAs to the limit.

The BoE's central bank rate has remained at 0.5% since 2009, providing banks with an unparalleled level of cheap funds, meaning that the banks have significantly less need to compete for funds from consumers. The introduction of the government's Funding for Lending scheme - providing up to GBP80.0 billion to major banks to subsidize mortgage lending - has further reduced the banks' need for funds, which has had a considerable impact on the savings market. There have been an estimated 2,560 savings products cut since the introduction of the Funding for Lending scheme in August 2012, as of November 2014.

Real wages endured negative growth for most of the 2008-2014 period, despite positive growth for the last three months of 2014. This, combined with soaring house prices and energy bills, means that consumers were squeezed during the recession, and are subsequently less able to set aside amounts every month for savings accounts. House prices in the UK increased by 18.6% between 2009 and 2014 - rising by 9.9% in 2014 alone, according to Nationwide's house price index. Research by consumer body Which? found that the price of gas and electricity grew by 127% from 2003-2004 to 2013-2014, and that the average household is paying GBP410.0 more per year for energy, despite using less.

Several changes have been made to ISA regulation to try to stimulate the industry in the face of low interest rates, since the Funding for Lending scheme. New ISAs (NISAs) were introduced in the April 2014 budget, which increased the upper annual limit for an individual to GBP15,000.0. Tax advantages were also introduced in Chancellor George Osborne's 2014 Autumn Statement, allowing ISAs to pass tax-free to a spouse after death. Osborne also announced that there will no longer be capital gains tax for profits of under GBP11,000.0 on stocks and shares ISAs.

Summary•

This report provides market analysis, information and insights into the UK ISA industry


  • It provides a breakdown of the different forms of ISAs in the UK

  • •It analyses drivers and the outlook for the market

  • •It provides information on the main banks in the UK market

  • •It covers news and regulatory developments


Reasons To Buy

  • Gain an understanding of the UK ISA industry


Key Highlights

Consumer credit growth has shown consistent signs of growth in 2014, for the first time since before the financial crisis. This is in a large part due to consumer confidence also recording a positive number for the first time since the credit crunch, low interest rates and a steadily growing GDP, as nearly every category of lending has grown up to July 2014.Demand for and availability of credit also grew in both the second and third quarters of 2014, which has been a key factor.

Individual Savings Accounts in the UK - Key Trends and Opportunities to 2018

Table of Contents

1 Executive Summary

2 Introduction
2.1 What is this Report About?
2.2 Definitions
2.3 Methodology

3 Market Analysis
3.1 Market Size
3.1.1 Cash ISAs
3.1.2 Cash ISA Breakdown
3.1.3 Stocks and shares ISAs
3.1.4 Sight and time deposits
3.1.5 National Savings and Investments (NS&I)
3.1.6 ISAs by region
3.1.7 ISAs by income group
3.1.8 Junior ISAs
3.1.9 ISAs by age and gender
3.2 ISA Interest Rates
3.3 Market Outlook
3.3.1 Total Number of ISAs
3.3.2 Cash ISAs
3.3.3 Stocks and Shares ISAs
3.3.4 Interest Rates

4.1 Economic Backdrop
4.1.1 Labor market conditions
4.1.2 Disposable income
4.1.3 Inflation
4.1.4 Central bank rate
4.1.5 Energy bills
4.1.6 House prices
4.2 Saving Behavior
4.2.1 Savings ratio
4.2.2 Switching providers
4.2.3 Saving motivations
4.2.4 Sentiment towards banks

5 Competitive Landscape
5.1 Market Shares
5.2 ISA Interest Rates

6 Product Innovation

7.1 Recent Changes
7.1.1 Cash ISA allowance and NISA
7.1.2 Funding for Lending scheme
7.1.3 Financial Services Compensation Scheme
7.1.4 Capital Requirements Directive IV (CRD IV)
7.1.5 Financial Services (Banking Reform) Act 2013
7.2 Upcoming Regulations
7.2.1 Basel III

9 News

10 UK Retail Banks
10.1 Barclays Plc - Company Overview
10.1.1 Barclays Plc - profile
10.1.2 Barclays Plc - main savings products
10.1.3 Barclays Plc - main competitors
10.1.4 Barclays Plc - board of directors
10.2 HSBC Bank Plc - Company Overview
10.2.1 HSBC Bank Plc - profile
10.2.2 HSBC Bank Plc - main savings products
10.2.3 HSBC Bank Plc - main competitors
10.2.4 HSBC Bank Plc - board of directors
10.3 Lloyds Banking Group Plc - Company Overview
10.3.1 Lloyds Banking Group Plc - profile
10.3.2 Lloyds Banking Group Plc - main savings products
10.3.3 Lloyds Banking Group Plc - main competitors
10.3.4 Lloyds Banking Group Plc - board of directors
10.4 National Savings and Investments - Company Overview
10.4.1 National Savings and Investments - profile
10.4.2 National Savings and Investments - main savings products
10.4.3 National Savings and Investments - main competitors
10.4.4 National Savings and Investments - board of directors
10.5 Nationwide Building Society - Company Overview
10.5.1 Nationwide Building Society - profile
10.5.2 Nationwide Building Society - main savings products
10.5.3 Nationwide Building Society - main competitors
10.5.4 Nationwide Building Society - board of directors
10.6 Santander UK Plc - Company Overview
10.6.1 Santander UK Plc - profile
10.6.2 Santander UK Plc - main savings products
10.6.3 Santander UK Plc - main competitors
10.6.4 Santander UK Plc - board of directors
10.7 The Royal Bank of Scotland Group - Company Overview
10.7.1 The Royal Bank of Scotland Group Plc - profile
10.7.2 The Royal Bank of Scotland Group Plc - main savings products
10.7.3 The Royal Bank of Scotland Group Plc - main competitors
10.7.4 The Royal Bank of Scotland Group Plc - board of directors

11 Appendix
11.1 Methodology
11.2 Contact Timetric
11.3 About Timetric
11.4 Timetric's Services
11.5 Disclaimer

List of Tables

Table 1: Banking Industry Definitions
Table 2: The UK - ISA Subscription Limits, FY1999-2000 to FY2014-2015
Table 3: The UK - Cash ISA Market Summary, FY2009-2013
Table 4: The UK - ISA Market Competitor Interest Rates (%), FY2014-2015
Table 5: Recent and Upcoming Regulatory Changes, 2012-2018
Table 6: Barclays Plc, Key Facts
Table 7: Barclays Plc, Main Savings Products
Table 8: Barclays Plc, Board of Directors
Table 9: HSBC Bank Plc, Key Facts
Table 10: HSBC Bank Plc, Main Savings Products
Table 11: HSBC Bank Plc, Board of Directors
Table 12: Lloyds Banking Group Plc, Key Facts
Table 13: Lloyds Banking Group Plc, Main Products
Table 14: Lloyds Banking Group Plc, Board of Directors
Table 15: National Savings and Investments, Key Facts
Table 16: National Savings and Investments, Main Products
Table 17: National Savings and Investments, Board of Directors
Table 18: Nationwide Building Society, Key Facts
Table 19: Nationwide Building Society, Main Products
Table 20: Nationwide Building Society, Board of Directors
Table 21: Santander UK Plc, Key Facts
Table 22: Santander UK Plc, Main Products
Table 23: Santander UK Plc, Board of Directors
Table 24: The Royal Bank of Scotland Group Plc, Key Facts
Table 25: The Royal Bank of Scotland Group Plc, Main Products
Table 26: The Royal Bank of Scotland Plc, Board of Directors

List of Figures

Figure 1: The UK - Amount Subscribed to All ISAs (GBP Billion), FY2008-2014
Figure 2: The UK - Total Number of ISA Subscriptions, FY2008-2014
Figure 3: The UK - Balances Outstanding on Cash ISAs in the Household Sector, 2009-2014
Figure 4: The UK - Total Amount Subscribed to Cash ISAs, FY2008-2014
Figure 5: The UK - Total Number of Cash ISAs, FY2008-2014
Figure 6: The UK - Cash ISA Balances as a Share of Total Deposit Balances Outstanding (%), 1999-2013
Figure 6: The UK - Cash ISA Sector Breakdown
Figure 7: The UK - Number of Stocks and Shares ISAs, FY2008-2009 to FY2013-2014
Figure 8: The UK - Amount Subscribed to Stocks and Shares ISAs, FY2008-2009 to FY2013-2014
Figure 9: The UK - Average amount subscribed to Stocks and Shares and cash ISAs, FY2005-2014
Figure 10: The UK - Amount Subscribed to Stocks and Shares ISAs, 2008-2013
Figure 11: The UK - Sight and Time Deposits Balances Outstanding at Monetary and Financial Institutions (GBP Billion), 2008-2013
Figure 12: The UK - Interest-Bearing Time Deposit Balances Outstanding (GBP Billion), 2008-2013
Figure 13: The UK - Non-Interest-Bearing Sight Deposit Balances Outstanding, 2008-2014
Figure 14: The UK - Interest-Bearing Sight Deposit Balances Outstanding, 2008-2014
Figure 15: The UK - Balances Outstanding on Household Deposits at National Savings and Investments (GBP Billion), 2008-2014
Figure 16: The UK - Number of People Subscribed to ISAs by Region, FY2011-2012
Figure 17: The UK - Number of Individuals Subscribed to all ISAs by Income Group and Subscription Limits, FY2011-2012
Figure 18: The UK - Number of Individuals Subscribed to Stocks and Shares ISAs by Income Group and Subscription Limits, FY2011-2012
Figure 19: The UK - Junior ISA Breakdown, 2012-2013
Figure 20: The UK - Junior ISA Subscription Limits, FY2011-2015
Figure 21: The UK - Number of Male ISA Subscribers by Age, FY2010-2012
Figure 22: The UK - Number of Male ISA Subscribers by Age, FY2010-2012
Figure 23: The UK - Number of Female ISA Subscribers by Age, FY2010-2012
Figure 24: The UK - Average Saving Account Interest Rates (%), 2011-2014
Figure 26: The UK - Total Number of ISAs Forecast: FY2007-FY2018
Figure 27: The UK - Total Amount Subscribed to ISAs Forecast: FY2007-2018
Figure 28: The UK - Total Amount Subscribed to Cash ISAs Forecast: FY2007-2018
Figure 29: The UK - Total Amount Subscribed to Cash ISAs Forecast: FY2007-2018
Figure 30: The UK - Average Interest Rates on ISAs, Forecast: FY2011-2018
Figure 31: The UK - Unemployment and Redundancy Rates (%), 2008-2014
Figure 32: The UK - Average Weekly Earnings (GBP), 2004-2013
Figure 33: The UK - Household Disposable Income (GBP), 1997-2013
Figure 34: The UK - Consumer Price Inflation (%), 2009-2014
Figure 35: The UK - BoE Official Bank Rate (%), 2004-2014
Figure 36: The UK - Annual Gas and Electricity Bills, 2004-2013
Figure 37: The UK - House Prices, 2004-2013
Figure 38: The UK - Household Savings Ratio (%), 2004-2013
Figure 39: The UK - Bonus and Standard Savings Account Interest Rates (%), 2011-2013
Figure 40: The UK - Number of Complaints About Savings Products, 2006-2013
Figure 41: The UK - Retail Saving Institution Market Shares (%), 2013
Figure 42: The UK - Market Shares of the Leading Building Societies (%), 2008-2013
Figure 43: The UK - Banking Regulatory Framework

  • Individual Savings Accounts in the UK - Key Trends and Opportunities to 2018
    Published: 05-Feb-2015        Price: US 2795 Onwards        Pages: 71
    Synopsis Interest rates are at their lowest levels since individual savings accounts (ISAs) began, which significantly reduces consumers' commitment to saving. As a result, consumers - those who can afford to save - are starting to opt either for stocks and shares accounts or deciding to pay off long-standing debts with higher interest rates. The average rate offered on cash ISAs fell from 2.55% at the start of 2012 to 1.74% in February 2013, and to just 1.64% at the start......
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