Net ISA sales go negative, says F&C

The latest Investment Management Association statistics which have just been released have revealed that despite soaring stock markets - net sales of fund based Individual Savings Accounts were actually negative in November (-£3.1 million), the first month this year when more investors have cashed up their plans than those who have bought new ones.

Ironically, November was of course the very month when minister Ed Balls revealed that the Government would grant ISAs a reprieve and make them a permanent part of the investment landscape.

At that time F&C called upon on the Chancellor to give ISAs a boost and raise the limit from £7,000 where it has sat stubbornly since launch in 1999, unlike other tax allowances which get reviewed upwards in each Budget.

In December F&C commissioned survey research which revealed that 70% of the public do not feel the Government does enough to encourage people to save and, furthermore, that less than 10% felt that the ISA limit should stay at £7,000. The research also showed that while a significant 21% felt the allowance should be doubled to £14,000, there was a clear majority of 56% in favour of an increase to £10,000.

Of course, it would be churlish to lay the blame for the November small net ISA outflow on savings policy - after all, gross ISA sales in November were only slightly down on October levels and still well ahead of the same month last year.

In the main this outflow may represent a combination of people cashing up once they had made up lost ground after the sharp falls in May, a background of a nuclear test in North Korea and nervousness about interest rate rises. But it could also reflect the maturity profile of existing investors. Notably, Personal Equity Plans outflows were relatively consistent between October and November.

Whatever the myriad of specific reasons, our recent research show that the public want more encouragement to invest in ISAs and now that the Government has signalled they have a long term future, we believe that the level of the allowance is long overdue for a review.