Bristol & West launches first ISA scheme

Bristol & West today launched what it believes will be the first account linked to ISA, the Government's new savings scheme. The building society is planning to launch its savings scheme next week, 16 months ahead of the planned Individual Savings Account, which is officially due out in April 1999.

Details of the ISA, the tax-exempt vehicle that will replace PEPs and Tessas, and which the Government says is designed to encourage millions of people to get into the savings habit, were announced earlier this week.

To help people on modest incomes save for an ISA, the Bristol & West account can be opened with as little as pounds 10, with the maximum investment set at pounds 1,000.

It will pay 7.2 per cent gross per annum, although the account holder will lose all interest on the money removed before the maturity date of May 6 1999.

Assuming no money is taken out, all interest will be paid on maturity and the aim is to pay that tax-free, within the ISA rules. Bristol & West's product manager Martin Broomfield said: "Our primary concern is to ensure that the public do not abandon the concept of saving between now and the introduction of the ISA.

"We also want to try and maximise the savers' tax-free earnings within the new guidelines. We will do our best to get our pre-ISA accepted as an ISA, as we did with our pre-Tessa." The Government ran into criticism when it launched the ISA on Tuesday. It was accused of squeezing the middle classes after announcing that Tessa and PEP savings accounts worth more than pounds 50,000 would be taxed from April 1999.