Not such a Nisa Isa

Keep saving, keep saving

I’ve been noticing it for a while, the slow clandestine creep downwards of rates on cash Isa products.

I started off with 3.5 per cent more than a decade ago on an HSBC Isa. In the heady heights of 2006 I managed to wrangle 4.25 per cent from HSBC, before the mighty crash. By the time I’d recovered from redundancy and was back on my feet to start adding to my savings, I was not only getting about 0.5 per cent but also having to endure three compounded errors in a row (where HSBC had lost my cheques/applications).

From thence I switched to Leeds Building Society, which in 2010 was the only one offering anywhere near 3 per cent. Within a year, it was down to 2.5 per cent and then down to 1.75 per cent for two years.

Now the most I can get from Leeds is a 1-year fix on 1.5 per cent. Still better than my husband’s Barclays Isa which is less than 1 per cent.

So having decided in 2014 that I wanted to start with stocks and shares I invested with Hargreaves Lansdown and started building up a tiny portfolio, while my 2-year cash Isa lingered untouched in the hallowed halls of the Headrow.

Thus far, the 2014/2015 S&S has returned 8 per cent in total; some parts, like the proverbial egg, are better than others. I’m not worried. It’s an 8 per cent gain not an 8 per cent loss, and it’s still better than any cash Isa on the market. It’s also more than any costs I would incur if I pulled the plug.

But this is my Long-long-long term saving. I want something up to two years in case Mr K and I get sprogged up or decide to go on a tour of the Antipodes. So I had a look for cash Isas on t’interwebs yesterday and found that the best rate was one from Santander, for 2 per cent. However I had to be a 1,2,3 customer. Always a catch.

I have opted for 1.85 per cent from Kent Reliance, which is the third highest rate I could find. The second was with Julian Hodge but I got bored of all the click-throughs on the website while looking up how to invest, so I went with Kent Reliance. I have to say, it was all done online within about five minutes - a simple, smooth and clear process. You can’t beat that kind of ease.

Yet I am still left with a bitter taste in my mouth that cannot be (solely) as a result of slightly off milk in my coffee this morning.

I wish providers would stop calling an Isa of 2% a ‘Nisa’. It’s not nice. It’s barely palatable. It might look good compared to CPI but let’s look at RPI, shall we? Let’s consider seven years of below-inflationary pay rises across the UK (assuming a level inflation rate of 2.5 per cent).

True I don’t have to pay so much for sour milk or petrol (maybe I accidentally put petrol into my Gold Blend this morning? I was quite tired). But I do have (supposedly) quite a few more miles to go in this chassis and I need my money to keep pace with me.

What’s so nice about 2 per cent? Maybe I should have gone all out on my S&Ss Isa. Many people would tell me to do so. But I like having cash, I need a bit of a cash net and, if figures from Cofunds are anything to go by, so do a lot of people in the UK.

According to Cofunds, Money Market funds saw impressive net sales in March, which resulted in the sector placing third in the net sales leader-board in the first quarter of 2015.

Furthermore, data released recently by the Investment Association has shown that net sales of S&S Isas slumped to just £325m in the key January to 5 April tax year end period - the once-heralded ‘Isa Season’. That’s a 57 percent drop from the £756m in the same period last year and despite the previous government increasing the annual allowance.

So people are looking for a safer place for their money. Cash and cash-like securities are winning combinations for people looking for a tax-efficient investment.

Banks and building societies should be falling over themselves to woo this money towards them, with more competitive rates. At the moment they’re competing to see who can offer the lowest rate. This isn’t a year of the Nicer Isa. It’s a Nasty Isa. It’s a farce. And we put up with it because they know we will. Because they know we want something in Cash, something more accessible. They’re right. We grumble but we put up with it because, well, what are the options? Property? Money Market funds? 

Most of us plebs haven’t got that kind of cash to stash. I can’t even afford a Lamb, let alone a Lambo.

I accept we have to accept these low rates. Nobody is going to listen to we great unwashed in this shady economic environment. But please, stop pretending these are Nisas. They’re not. They’re Pathetic Isas. Pisas. And I’ll leave the pronunciation up to you.

Non Mea Culpa - it's all at your own risk

If you are sent cheques you bear all responsibility 

While scrying the internet on press day for stories that might whet the advisers' appetite, I came across consumer champion Tony Hetherington's latest investigation into Missing Cheques. More accurately, how one man cashed in his savings with Standard Life, and was sent a cheque from Capita to the tune of £928.

The cheque was paid into an account at Lloyds - but not by the intended recipient. He has never received his money after cashing in his savings. The upshot? According to Capita, it's all at the investor's own risk. They claimed to have sent the cheque to the correct address, so even if his mail was intercepted and the cheque was stolen, he will never see his money unless he tries to take the person who cashed his cheque to court.

It is all "at your own risk" if a cheque is sent to you.

Now I've heard the 'caveat emptor' phrase a million times and I have some sympathy for it. You must be able to bear some responsibility for what you buy. If you don't check the terms and conditions, if you don't get someone else to do this for you, if you don't understand what you are buying - then don't buy it! It is basic common sense.

You don't go into a clothes shop and tell the assistant that you like the bag in the window, then get given a mystery box all wrapped up and told to "sign here". You check the box to see what is in it before you pay for it. Or any sensible person would.

This reminds me of a story back from when my late Great Aunt Ivy was a young lady travelling to work in London back in the early 1920s. She bought herself a nightgown - a silk one - from a posh shop in the West End. The lady at the counter took the slip, turned around, wrapped it into a box and delivered it to Ivy without saying a word. When Ivy got home to try on her purchase, it was an old vest. No returns.

Always check in the box is a good simile for 'caveat emptor'.

But when it comes to other parties entrusted with the delivery of your money, what has happened to this man in the Mail's column is pretty shoddy behaviour. Did Lloyds not double-check the names and initials on the cheque? Why has Capita absolved all responsibility? Why has nobody examined the information to see whether Capita did, indeed, put the right address on the envelope?

To say that once you have sent a cheque to someone, it is their responsibility is ludicrous. There should be some duty of care involved - such as requring a signature on delivery of the cheque. This may not be a lot of money in the world of investment managers and consultants, whose salaries are enviable, but to a man whose entire savings with that provider didn't even amount to £1000, this makes a lot of difference.

Why couldn't the money be delivered by BACS?
Why couldn't it be paid directly into his account?
Why wasn't the cheque, if it had to be posted, tracked, marked for signature on receipt?

This smacks of being careless with other people's money and for the victim, this isn't a laughing matter. Although of course, someone was laughing - the person who took this fellow's cheque all the way to the bank.