Majority Of British Investors "No Wiser" About ISAs Despite A Year Of Intensive Promotion

Two thirds (67%) of the British public, who are aware of ISAs feel that they have no better understanding of ISAs than they had 12 months ago according to a latest MORI survey which has been commissioned by Charles Schwab Europe.

With just days to go before the launch of ISAs on April 6. the extensive survey of consumer attitudes suggests that there will be a very mixed reception by the investing public.

But by far the most striking part of the research was the overwhelming proportion of potential investor who, for whatever reason, had fell that they were "no wiser" about the entire ISA programme despite the exhaustive promotional efforts of the financial services industry.

Looking at ISAs within the broader context of the government's drive to promote wider share ownership, the investing public seems undecided about what more should be done to persuade people to take responsibility for their finances.

Among those who hold shares, just over one in three (36 per cent) of those polled in the Charles Schwab/MORI survey felt that the government did enough to promote investment. Just under 3 out of every 10 (26 per cent) felt that more could be done,.with a reduction in share dealing tax the most widely suggested reform.

But whilst acknowledging the need for investment education, one half of those asked said they did not know what the government should do to promote share ownership.

Reflecting perhaps the apparent difficulty the public has had understanding the ISA concept, more than six out of every ten (65 per cent) potential investors intend to opt for the "simplest" cash-based products.

Around 36 per cent intend to go for equity-based products - the successor to the ever-popular PEP programme.

Within the highest-income Class AB households, demand for equity products nearly matches the interest in cash-based products (68 per cent), with just over half (53 per cent) of all those earning over 16330.000-a-year and intending to buy an ISA expected to go for an equity-based scheme.

Life insurance-backed products appear to have by far the least appeal with just 15 per cent of those polled registering an interest.

Although personal visits to retail outlets of financial services companies remain the most likely way that investors will buy equity-based ISA products (36 per cent). nearly 30 per cent would now opt for telephone and internet services.

Commenting on the findings, Guy Knight, Vice President of Charles Schwab Europe said: "this poll backs up the conclusion of our own internal research. The average investor remains confused by the plethora of new ISA-related products coming onto the market.

Drawing on all of this research, we are launching the market's first self-select ISA, which, in line with our customers preferences, will be as similar to the existing PEP product as possible."

Charles Schwab will be offering both a Maxi and Mini Stocks and Shares self-select ISA, which will allow customers to trade-unions on an ongoing basis by phone, post, fax and the internet.

The self-select ISA, meaning that customers are able to choose which shares to buy and sell, will offer investors a wide choice of investments including ordinary shares of UK companies, certain convertible shares, preference shares and corporate bonds as well as qualifying unit or investment trusts.

Charles Schwab PEPs will continue to run as they do now and will allow customers to trade-unions in their PEPs just as they do now.

Technical details

MORI interviewed a representative sample of the population of Great Britain comprising 2,000 adults aged 16+ between 11-16 March 1999.