None of the direct access mini-cash Isas which were in the top 10 by yield at launch in 1999 remain ...
None of the direct access mini-cash Isas which were in the top 10 by yield at launch in 1999 remain in the top 10 in 2003, according to data from Intelligent Finance (IF).
Only two of the top 10 paying accounts stayed more than a year in the peer group after the tax-wrapper vehicle first came onto the market.
Banks and building societies are benefiting from consumer inertia in the Isa market, as only 5% of investors surveyed have ever switched their Isa provider. There is a propensity for the accounts to become less competitive once providers are no longer pushing to build up an investor base, according to the group.
IF chief executive Grenville Turner said a survey from ICM Research taken on 5-6 March highlighted the limitations of using best buy tables when choosing financial products. 'Many providers continue to launch products with attractive rates only to quickly cut these rates once they have won substantial new business,' he added.
IF said the low rate of switching is unsurprising given that around 17% of respondents are unaware they are able to switch Isa providers.
Meanwhile, a March survey from online broker Comdirect showed 88% of respondents were unsure as to the annual tax-free allowance for a maxi Isa. Comdirect's quarterly Cash Confidence Index showed a marked drop in awareness from the first quarter of 2002, when only 49% of respondents were unaware of the Isa tax breaks.
In addition, 11% of respondents mistook the £3,000 tax-free allowance for a mini Isa for the £7,000 allowance of a maxi Isa.
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