17 Mar 2008: Investors Unaware of Changes to ISA and PEP Regulation

New research* from Barclays Stockbrokers reveals that there is limited awareness among investors of imminent changes in the ISA industry. From 6 April 2008 new legislation will mean that Personal Equity Plans (PEPs) will cease to exist, and will automatically become Stocks and Shares ISAs. Under the changes, investors will also be able to consolidate their PEPs and ISAs into one account, and, from 6 April 2008 the overall subscription limit for a Stocks and Shares ISA will increase from £7,000 to £7,200.

Investors hold over £80 billion in Stocks & Shares ISAs and over £79 billion in PEPs**, yet the study, undertaken amongst those who have invested in a stocks and shares ISA in the current tax year, reveals only 45 per cent know that PEPs will become ISAs and less than three quarters, 71 per cent, of investors know the allowance for ISAs will increase. Worryingly, only four in ten, 40 per cent, of those surveyed said they were fully aware of how the changes to PEPs and ISAs would affect their investments.

Tom Ryan, Director at Barclays Stockbrokers said: “It is astonishing that despite the new regulation almost upon us, a large number of ISA investors are still unaware of the forthcoming changes to PEPs and ISAs. Less than half of investors are even aware that PEPs are becoming ISAs. These changes to regulation present a real opportunity for investors to reduce the costs, and with effect from 6th April they will be able to protect more of their savings from tax by investing up to £7,200 into their Stocks and Shares ISA.”

The research also revealed only 41 per cent of respondents are aware that the regulatory changes will allow investors to consolidate their PEPs and ISAs into one account; and only seven per cent think they will definitely do so. The new legislation will also allow investors to merge any Mini and Maxi ISAs with their PEPs – only five per cent of those surveyed plan to definitely do so. If you assume that an investor holds seven self select ISA & PEP accounts with different providers at present and decided to consolidate these with Barclays Stockbrokers, the investor would save £267.18 pa in charges be consolidating their ISA & PEP holdings to Barclays Stockbrokers***.

Tom Ryan continued: “Investors should already be thinking about how they are going to invest in the next tax year and it is a perfect opportunity for them to review all their tax wrapped investments to make sure that they still suit their objectives and to minimise administration charges. The new ISA regulations have been put in place to benefit investors and they should make the most of these changes. There is a real opportunity for investors to reduce the fees that they pay and so maximize the returns on their investments.”

One of the key benefits of the regulation changes will be that from 6 April 2008 investors will be able to merge PEP and ISA accounts held with the same provider. More importantly, investors will also be able to transfer all the PEP and ISA investments they hold to one account with one provider. As an example, by transferring their ISA investments held with other providers to a Barclays Stockbrokers account today investors could:

· Reduce charges and paperwork

· See all their investments in one place to make them easier to manage

· Benefit from Barclays Stockbrokers new maximum administration charge of £50 plus VAT per annum

Furthermore, Barclays Stockbrokers will pay up to £500 of any transfer charges investors may incur.****

* All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 1,500 adults. Fieldwork was undertaken between 5th - 10th March 2008. The survey was carried out online. The data is unweighted.

**Under the latest HMRC data for April 2007 the tax wraps held the following assets:

PEPs : £79.3bn
ISA : £80.1bn

***Fees taken from the respective websites on 13th March 2008.

****Barclays Stockbrokers will refund investors when their ISA account is opened and when it has received proof of transfer costs from the previous broker. This process normally takes around four weeks. Payment will be made to the chosen bank account or by cheque if this does not apply. Barclays Stockbrokers reserves the right to terminate or amend this offer at its discretion. Barclays Stockbrokers will refund up to £150 per account of transfer out costs charged by the ceding ISA manager, up to a maximum of £500 per customer.

If investors hold more than one PEP and/or ISA account with Barclays Stockbrokers, they may choose to take the opportunity to merge these accounts. Investors should note that in doing so, they will no longer be able to view online the dealing history on any accounts closed as a result of the merger.

To find out how to merge accounts or transfer PEPs and ISAs to Barclays Stockbrokers visit www.stockbrokers.barclays.co.uk/learnmore. Alternatively, investors can contact the client service team on 0845 601 7788 if within the UK or 00 44 141 352 3909 from abroad. Furthermore, from April, investors will be able to make additional contributions, up to the annual allowance for each successive tax year, on all ISA accounts, including those that were formerly PEPs. With effect from 6 April 2008, Barclays Stockbrokers PEPs, Self Select Maxi ISAs and Self Select Mini ISAs will all be known as Barclays Stockbrokers Investment ISAs.