10 July 2009
Saffron Building Society comments on new ISA rules
Following the announcement of the increase in the ISA investment limit in the Government's 2009 Budget, financial service providers have been issued with guidelines of how to implement the changes.
Firstly, it has been agreed that ISA investors do not have to be notified of changes to the limits for the over 50s.
In addition, for current ISA products, ISA providers do not have to allow investors over the age of 50 to subscribe to the new limits from October. Whether to offer the new investment limit before April 2010 can, it has been decided, be taken as a 'commercial decision' and not, as previously assumed, as a regulatory obligation.
Saffron Chief Executive, Andy Golding said:
"I was surprised by the recent guidance issued to ISA providers. In the current low interest rate environment, savers need as much encouragement as possible - particularly older savers who are not experiencing the return on their money that they might have expected. If increasing the limit for over 50's ahead of April 2010 is voluntary, many older ISA savers may miss out on the opportunity to grow their ISAs.
"At Saffron, we will be upping our limits to the over 50s from 6th October on all of our cash ISAs.
"I appreciate the difficulties faced by ISA providers who will need to review their products in light of the Budget announcement. Changes to product rules will have some commercial impact, but as a regional mutual, we feel very strongly that acting in the interests of savers is the right thing to do."
Regarding Saffron's popular 7% Regular Saver ISA, Andy explains Saffron's adaptation as follows:
"Our Regular Saver ISA can not be topped up to £5,100 straight away, because it operates on a maximum investment per month basis. The maximum for over 50's per month will increase from £300 per month to £550 per month - this will ensure that over 50s will hit the £5,100 limit by April 2010.
"I'd encourage older holders of our Regular Saver account to read the FAQs on our website or to call in to their local branch if they have any questions. We don't want any of them to miss out on the opportunity to save more"
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