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
Sunday 09 October 2011
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.
Independent Partners: Get fee-free expert mortgage advice and find the right mortgage deal for you.
Bargain Hunter: Comparethemarket.com launches two-for-one cinema tickets offer
10 tips for taking out a personal loan
You'll need £220,000 for a minimum wage in your retirement
Pension freedom: Steve Webb answers your questions on the big shake-up
Bank-beating exchange rates on your international payments
- 1 Germanwings crash: Police make 'significant discovery' at home of co-pilot Andreas Lubitz
- 2 JK Rowling responds to fan tweeting she 'can't see' Dumbledore being gay
- 3 The West has it totally wrong on Lee Kuan Yew
- 4 #FreeTheNipple: Women in Iceland bare breasts in solidarity with trolled student
- 5 Jeremy Clarkson calls on trolls to leave producer Oisin Tymon alone: 'None of this is his fault'
Nigel Farage brands LGBT activists 'filth' and 'scum' and accuses them of scaring away his children after they invade his local pub
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
JK Rowling responds to fan tweeting she 'can't see' Dumbledore being gay
Russia threatens Denmark with nuclear weapons if it tries to join Nato defence shield
Jeremy Clarkson sacked live: Alan Yentob 'wouldn't rule out' ex Top Gear host's BBC return
Germanwings plane crash live: Andreas Guenter Lubitz intentionally crashed flight 9525 into the Alps in act of mass murder and suicide – latest
iJobs Money & Business
£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...
£16000 - £18000 per annum: Recruitment Genius: A position has arisen within th...
£50000 - £63000 per annum + excellent benefits : Ashdown Group: IT Manager / D...
£16500 per annum: Recruitment Genius: Applicants must hold a valid SIA Door Su...
Day In a Page
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
A boutique mews house, set around a central courtyard, with three bedrooms and a private roof terrace
A four-bedroom farm-conversion with three bathrooms and two reception rooms
A two-bedroom detached house with ensuite bathrooms and a sun-drenched decked terrace, £750,000
A modern and spacious two-bedroom, penthouse flat with two bathrooms in a prestigious development
A beautifully renovated five-bedroom terrace with three reception rooms and a courtyard garden, £700,000
A four-bedroom period house which has been extended to provide almost 2,500sq ft of living space, £675,000
A pretty three-bedroom Georgian home with a 22ft drawing room and a master suite with a balcony, £525,000
A substanstial family home with five bedrooms and landscaped gardens in the much sought-after Branksome Park area
A well-presented three-bedroom house with front and rear gardens, close to White City station, £475,000
A handsome five-bedroom house in a sought-after location close to the city centre
A five-bedroom country home with valley views, equestrian stables and 27 acres of land, £725,000
A six-bedroom farm house with separate, detached cottages and 371 acres of land
A two-bedroom cottage with parquet floors, chunky beams and an open fireplace
A three-bedrrom flat with 2,733sq feet of living space, a beautiful private garden and 15 acres of communal grounds
A four-bedroom chalet bungalow with three bathrooms and a spacious garden, £525,000
A two-bedroom flat with an open plan kitchen and two balconies, close to Arsenal station