Intelligent Finance - Press Release

12 March 2003

6 MILLION PEOPLE SET FOR LAST MINUTE ISA STAMPEDE

INTELLIGENT FINANCE RAISES MINI CASH ISA TO 4.05% AND GIVES ONE YEAR CAST IRON RATE GUARANTEE

Nearly six million (5.85m) people are set for a last minute rush to use their ISA allowance before the 5 April deadline for the end of the financial year, according to new ICM Research for Intelligent Finance.

Commenting Grenville Turner, Chief Executive, Intelligent Finance said:

"People looking for a cash ISA in the run up to April 5 can come to Intelligent Finance knowing we will make their money work harder for them. Those who have seen their rates slide recently may want to move and get the security our rate guarantee offers. The millions of people who have money sitting in a savings account and haven't yet used this year's tax-free savings allowance still have time to do something about it. Our account gives them a great rate, saves them tax and still allows them to access their money whenever they want."

The new research findings come hot on the heels of Intelligent Finance's decision to buck the trend of reducing interest rates and raise the rate paid on its mini-cash ISA from 3.7% to 4.05% (AER/Gross). The bank has simultaneously introduced a one-year guarantee to pay at least 0.30% above base on its mini-cash ISA until 15 March 2004.

OVER 4 MILLION SAVERS WITH CASH FAIL TO USE ISA ALLOWANCE

Some 17% of the adult population - some 7.65 million people - have already used their ISA allowance for this year. But some 4.7 million people who have more than £2,000 stashed in a savings account - 2.7 million of whom have over £5,000 saved - simply fail to take advantage of the tax-free savings that a mini-cash ISA offers.

17% of adults unaware they can even switch ISA providers

With only one of the top five paying mini-cash ISAs from two years ago, still holding a spot in the top five paying accounts today - and then only on account of a 0.5% bonus - it is clear that many ISA providers have eased their rates down once they have won savers' business.

Despite this, only some 5% of ISA holders have ever switched their ISA provider. The low rate of switching is hardly surprising when 7.65 million people - 17% of the adult population - who haven't ever moved - didn't even know they were able to switch their ISA providers.

31% of UK adults - some 13.95 million people - say they are planning to use their tax-free savings allowances in the year ahead. This is significantly up on the 11.9 million who took out ISAs in 2001/2 and ahead of provisional figures for 2002/3 suggesting an increase in people now considering building up their savings for the future.

8 million set to plump for cash ISA in year ahead

The stockmarket slump of recent years is clearly having its effect on ISA savers. Some 54% of people planning to take out an ISA next year - some 7.7 million people - plan to opt for a cash ISA, more than stocks and shares and bonds combined (20% and 26% respectively).

Other key highlights of the research include:

• 51% of people have no plans to use their tax-free savings allowance in 2002/3.
  
  
• Only 9% of people aged between 18-34 have used their ISA allowance this year, some half of the national average.
  
  
• People in the South East are least likely to have already used their ISA allowance this year, with only some 13% having done so to date. People in the north of England are the most likely, with some 22% of people having taken out an ISA.
  
  
• People in the South East are the likeliest 'last minuters' with some 17% claiming they are planning to use their ISA allowance before the deadline, well above the national average.
  
  
• AB's were most likely to have switched ISA providers in the past, with some 11% saying they had switched compared to only 3% of C2DE's.
  
  
• Women appear to be more cautious than men following the stockmarket slump with some 19% - as opposed to 16% of men - planning to take out cash ISAs.
  
  
• 45-64 year olds unsurprisingly are the most likely to opt for the certain returns of cash with some 20% planning to take out cash ISAs in the year ahead. Bonds are also relatively popular with this age group with some 13% - against 8% across all age groups - planning to opt for bonds.
  
  
• People living in the Midlands and the South East are the most likely to opt for the certainty of a cash ISA in the year ahead, 20% and 19% respectively as opposed to 17% across the country.
  
  
• 18-24 year olds appear to be most optimistic about stocks and shares with some 11% planning to invest their ISA allowance in stocks and shares, as opposed to only 6% across all age groups.

NOTES TO EDITORS

1. Intelligent Finance's new ISA rate will be paid to both new and existing customers from 15 March 2003.

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