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Ahead of the game on ISAs

INDIVIDUAL Savings Accounts (ISAs) - the Government's new tax- free savings vehicles and the replacement for PEPs and Tessas - are not officially open for business until next April. But investors with internet access can arrange their ISAs now. ISAXpress, from investment house Fidelity, lets web users open an ISA, fill in the forms, and pay using a Switch or Delta card. Investors will also be able to use the site to monitor the performance of their investments, and switch holdings between funds.

ISAXpress is completely paperless. All the forms are on- line, and there is no need for a signature. Instead, investors enter their National Insurance number to verify their identity. The only paper part of the process is a confirmation note that Fidelity sends out once the account is open.

The Government's agreement to allow on-line ISA applications will play an important part in keeping down the costs of the accounts. Without the need for paper forms, investment companies can connect web sites direct to their central computer systems for fast and efficient processing.

Running accounts over the net should also encourage a broader take-up of ISAs, says Zach Leonard, electronic channels development manager at Fidelity. "I believe we will see a shift in investment behaviour. "Younger people will take up the electronic platform."

According to Fidelity, internet investment is becoming more and more mainstream. More than a third of the company's direct investors have access to the net at home.

Fidelity adds that more than half its investors have already bought a PEP for the 1998-99 tax year, and they want the facility to plan their 1999-2000 investments, including ISAs, ahead of the April launch.

Early investors also get substantial discounts. These are only available to clients who organise their ISAs over the net.

Fidelity is taking deposits for ISAs now, in the (taxable) Fidelity Cash Fund, now paying 7 per cent gross interest. In the new year Fidelity will contact investors to ask which funds they want to hold in their ISAs. In April it will transfer the money into an ISA account and send clients a cheque for the interest on their Cash Fund holdings. As an added incentive, Fidelity will waive the initial ISA charge for people who use ISAXpress to invest pounds 7,000 before 31 December this year.

Contact: Fidelity ISAXpress, www.fidelity.co.uk