Britain's big banks show little interest in junior ISAs

There is little support so far for the scheme to replace child trust funds. Julian Knight reports

A flagship government scheme to get millions of parents saving for their children's future is failing to get the support of some of Britain's biggest banks and could fall flat.

Junior individual savings accounts (JISAs) are due to be introduced on 1 November, allowing up to £3,600 a year to be put into either cash savings or equities tax free. The scheme, announced last year by Chancellor George Osborne, was designed to replace child trust funds and help parents and grandparents save for their children's university fees or a deposit on a first home.

However, an Independent on Sunday investigation reveals that big-name providers are not yet prepared to support the scheme, instead adopting what one senior banking source called a "wait and see" approach. As a result, parents and children planning to open JISAs are likely to find the choice of providers severely limited.

Some of Britain's biggest high street names are not planning to have accounts available for the 1 November launch. A HSBC spokesperson said that while the bank is "extremely interested" in offering a JISA, it "doesn't have a date for a launch". Barclays' approach was the same. Lloyds, which is Britain's biggest savings provider, said it was still "working through the detail" of JISAs only three weeks prior to the start date, making it unlikely, according to observers, that they will be ready in time.

Of the big high street names, only Nationwide would confirm that it would be ready to go to market with a JISA cash savings account on the launch date. However, it said that there were "no immediate plans" to distribute an equity ISA, which can potentially offer higher long-term returns than cash.

Ben Yearsley, from the independent financial advice firm Hargreaves Lansdown, which has announced details of its own JISA launch, said he was amazed at the attitude of the big banks. "Perhaps they don't think that the £3,600 savings limit is enough to bother with, but I think that is shortsighted. That sum can add up very quickly," he said.

"It should be easy to administer as, basically, it's an adult ISA with a lower investment limit. It's great for people like us who will be offering equity JISAs from 1 November but it does mean savers will have fewer choices than they could rightfully expect, particularly in cash."

Likewise, Tom Stevenson, the investment director at Fidelity Investments, which will be offering a JISA through its fund supermarket, said he thought it was essential to make the 1 November date. "We wanted to be able to offer the advantages of a junior ISA, no matter what age, straight away. It is hard to understand why anyone would not turn to a junior ISA as the first place to save or invest for a child because there are many tax efficiencies and administrative advantages for those making contributions for a child."

Fidelity and Hargreaves Lansdown both offer fund supermarkets which allow savers to spread their money between a massive range of funds. Mr Stevenson said: "Unlike with an adult ISA, a junior ISA has to be with one provider at any given time (although it can be switched between providers if you wish). This means that if you invest with a platform [fund supermarket] you can allocate the allowance among a variety of fund providers each year, rather than being able to invest with only one provider."

It seems only a handful of fund management groups will be ready to offer a JISA come 1 November, perhaps preferring to pick up business through the fund supermarkets. Witan is believed to be ready, but giants such as JP Morgan and F&C are not expected to come to market until the first quarter of 2012. "A lot of people are holding fire but F&C's experience with child trust funds means they gained a huge amount of business from under-18s, and most people investing in CTFs kept with the same provider," said Annabel Brodie Smith, communications director of the Association of Investment Companies.

Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Financial Adviser

    £20000 - £60000 per annum: Recruitment Genius: Are you recently QCA Level 4 qu...

    SThree: Graduate Recruitment Resourcer

    £20000 - £22500 per annum + OTE £30K: SThree: SThree Group have been well esta...

    Guru Careers: Application Support Analyst / 1st Line Support

    £25 - 30k: Guru Careers: We are seeking an Application Support Analyst / 1st L...

    Guru Careers: .NET Developer / Web Developer

    £45K - £55K (DOE) + Benefits: Guru Careers: We are seeking a full stack .NET D...

    Day In a Page

    Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

    Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

    How a costume drama became a Sunday night staple
    Miliband promises no stamp duty for first-time buyers as he pushes Tories on housing

    Miliband promises no stamp duty for first-time buyers

    Labour leader pushes Tories on housing
    Aviation history is littered with grand failures - from the the Bristol Brabazon to Concorde - but what went wrong with the SuperJumbo?

    Aviation history is littered with grand failures

    But what went wrong with the SuperJumbo?
    Fear of Putin, Islamists and immigration is giving rise to a new generation of Soviet-style 'iron curtains' right across Europe

    Fortress Europe?

    Fear of Putin, Islamists and immigration is giving rise to a new generation of 'iron curtains'
    Never mind what you're wearing, it's what you're reclining on

    Never mind what you're wearing

    It's what you're reclining on that matters
    General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

    Chuka Umunna: A virus of racism runs through Ukip

    The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
    Yemen crisis: This exotic war will soon become Europe's problem

    Yemen's exotic war will soon affect Europe

    Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
    Marginal Streets project aims to document voters in the run-up to the General Election

    Marginal Streets project documents voters

    Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
    Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

    The real-life kingdom of Westeros

    Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
    How to survive a social-media mauling, by the tough women of Twitter

    How to survive a Twitter mauling

    Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
    Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

    At dawn, the young remember the young

    A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
    Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

    Follow the money as never before

    Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
    Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

    Samuel West interview

    The actor and director on austerity, unionisation, and not mentioning his famous parents
    General Election 2015: Imagine if the leading political parties were fashion labels

    Imagine if the leading political parties were fashion labels

    Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
    Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

    Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

    The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence