EASYMONEY has claimed that complaints made to the Financial Ombudsman Service (FOS) over cash ISA fees and poor returns are “the tip of the iceberg” regarding public frustration over low interest rates.
The newly-launched peer-to-peer lender, which is part of Sir Stelios Haji-Ioannou’s easy family of brands, cited FOS data that showed there were 530 complaints made about cash ISAs last year. Nine per cent of complaints concerned low levels of interest and excessive account fees.
Other causes of complaints about cash ISAs were poor customer service (25 per cent) and failure to follow instructions (26 per cent).
“People are so angry about poor cash ISA rates that some are even complaining to the Ombudsman – that shows just how bad things have become,” said Andrew de Candole, chief executive of EasyMoney. “What is the point of getting a 1.3 per cent return when inflation is 2.7 per cent? It barely beats keeping it under the mattress.
“As we have been suggesting, these low-interest cash ISAs should carry a risk warning: This account will destroy value.”
The most recent Bank of England statistics show that in March 2018, the average cash ISA was paying just 0.86 per cent, while the best instant-access cash ISA rate was 1.3 per cent. At the same time, inflation was 2.7 per cent. EasyMoney said that savers are becoming “increasingly disillusioned” with the low interest rates on offer, as more people start to look for better-performing alternatives.
“Investing some money into an Innovative Finance ISA (IFISA) that returns over four per cent, or even more than seven per cent annually, can help to keep everyday investors ahead of inflation and keep their wealth growing” added de Candole.
“We’re not suggesting people move all their savings into an IFISA, but there is certainly a case to be made that they should consider it as a higher-yielding part of a balanced portfolio.”
EasyMoney recently launched a new ‘conservative’ IFISA, which targets annual returns of 4.05 per cent. The company also offers a ‘balanced’ IFISA targeting a 7.28 per cent per year.