Isa providers had better get moving

The creation of the merged Isa was great news. Now the providers need to come up with one - the sooner the better.

There's a major challenge out there for Isa providers: create an acceptable merged-Isa for us by 1 July. That's the date the chancellor has given for the introduction of the Nisa.

We will all be allowed to put £15,000 a year into our Individual Savings Accounts, and for the first time, we will be able to do so without worrying about whether we hold our money in cash or in shares according to the chancellor, we will now be able to transfer between the two at will.

We will also no longer have to pay 20% in tax on the interest we earn on cash held in non-cash Isas.

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This is brilliant news for the likes of me (and I suspect an awful lot of Moneyweek readers). I hold a good amount of cash in my Isa (as I do in my Sipp), but as I move in and out of the market occasionally, I have never been able to hold that cash in a cash Isa.

Instead, I have had to leave it in my stocks and shares account and put up with being paid an interest rate on it of either nothing or almost nothing.

On the face of it, I won't have to do that any more. Sadly, nothing is ever as simple as it should be. And in this case, the problem is that no providers have yet committed to adding cash Isa facilities onto their stocks and shares Isa facilities.

Hargreaves Lansdown, Halifax and Barclays "have no definite plans" to create any, says Mark Atherton in the Times. And Fidelity "hasn't made a decision yet".

The good news is that all these firms have a serious incentive to think about making definite plans sharpish. Why? Because if they are offering 0% or 0.01% on cash held in an Isa, but we can all transfer out to somewhere else (see here for Isa best buys) with not much bother, we probably will.

And that not only means they will lose out on any interest rate spread they take, but that they will lose control of the cash: once it is settled elsewhere, it may not come back.

This is the perfect opportunity for financial services providers to show us that they can create simple, straightforward consumer friendly products that keep us loyal to them. Let's see how they do.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.