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Savers face a decade of poor returns with ISA rates unlikely to reach pre-crisis levels until 2025

  • Chris Williams, CEO of Wealth Horizon warns of poor ongoing returns in the run up to ISA season.
  • Since 2008, only one in every five ISAs taken out have been stocks and shares.
  • Introduction of NISA may cause more confusion among savers.


With this year’s ISA deadline around the corner, those savers insisting on keeping their money in cash ISAs are being advised that they may not see interest rates return to pre-financial crisis levels until at least 2025, according to online financial advice company, Wealth Horizon.


In addition, current savers are being bullied by banks and building societies over their current cash ISA rates.


Chris Williams, CEO of Wealth Horizon, said: “Even the punchiest of predictions emerging from economists at the Bank of England have placed the base rate at 1.5 per cent in 2020. The Monetary Policy Committee is in no rush to raise rates and even when it does, it is unlikely that this increase will be passed on directly by banks and building societies. As such, it could be closer to 2025 before savers see any real improvements to the interest rates they receive on their cash ISAs.


“In 2007, prior to the financial crisis, the average cash ISA rate was 5.5 per cent, before slumping dramatically as banks cut interest rates to record lows. Last year, some cash accounts paid  less than 1%, equating to around just £1 interest on every £1,000 in savings.(1)


“When you take into account inflation, these accounts are eroding people’s savings. A savings account that loses money – where is the logic in that? Yet despite poor cash ISA returns, just one in every five ISAs opened have been a stocks and shares ISA (20.8 per cent). Since 2008/09 tax season, around £217bn has been placed into cash ISAs compared to just the £88.2bn that has been invested into a stocks and shares ISA.(2)


Williams, continued: “Worst still is the way that these banks and building societies bully their customers in such an obvious manner. ISA savers are often drawn into headline grabbing rates in the run up to the ISA deadline – teaser rates which then vanish after a few months.


“The introduction of the New ISA (NISA) will allow some savers to move their funds between cash and investments more easily, but unless savers take an active interest in the management of their account, their money may be placed in default cash savings rather than potentially earning a better return through investing in the stocks and shares side of the NISA.


“People should never assume that the price they get when they open the account is what they will have for the lifetime of the ISA. Banks rely on the apathy of savers not to check their rates and drive down the returns that they offer existing customers, so that they can offer new savers preferential rates. It’s a vicious circle for customers who simply want their nest egg to be looked after and taken care of.”


“Compare the 0.01 per cent some savers were getting last year to those that choose to invest their funds in a stocks and shares. Even with 2014 being a particularly difficult year for the markets, the UK all companies sector, which tracks funds which invest in UK equities, delivered a return of 0.9 per cent, while corporate bond funds have seen an average return of nearly 10 per cent.  Even the most conservative and risk adverse of investment ISAs are likely to have seen a greater return than that of their cash counterparts.”(3)


The value of an investment can go up and down and so understanding your appetite for risk is important. To download your free, personal investment report, that will help you identify your personal appetite for risk and advise on how you might choose to invest your ISA, – visit  




Contacts: David Stewart, Senior Consultant, MRM 020 3326 9910 / 07971 182 813   Nick Paler, Consultant, MRM 020 3326 9915   Editors notes:

  1. Source: Moneyfacts
  2. Source: HM Revenues & Customs, August 2014
  3. Source: Morningstar, Data as of 02/01/2015 on a mid-to-mid, net income reinvested, Sterling basis


About Wealth horizon Wealth Horizon is the first service in the UK to provide responsible and regulated investment advice online. Without speaking to an adviser, each investor can receive regulated advice and build a tailored portfolio based on their individual risk profile. The advisory service will put an end to the advice gap, making investing more accessible and affordable to all, by allowing customers to access as much or as little investment advice as they require.   For an image of Chris Williams, please contact MRM on 020 3326 9910 or email

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