What are the standards for Individual savings account and their types?

When creating the ISA scheme the Government set down a number of standards that ISA providers should abide by. These are known as the CAT standards. This relates to the requirement that the ISA manager offers a reasonable Charge, easy Access and fair Terms (hence the term CAT).

However when you are looking at a particular ISA, the standard may not necessarily be suitable. In addition the CAT standards do not offer any form of guarantee, or that the product is Government approved. They are simply guidelines.

          Charges

          No one-off or regular charges of any kind (such as withdrawal charges). Replacement charges are allowed.

          Access

          The minimum allowed transaction on the ISA must be less than £10, and you should be able to withdraw money from the ISA within 7 working days.

          Terms

The interest rate payable on the ISA should not be more than two points lower than the Bank base rate of interest. Any increases to the interest rate should reflect changes to the base rate on a monthly basis.

Any decrease in the interest rate may be slower, and there must be no other conditions on the ISA, such as limits on how often you can withdraw money.

          Charges

          The charge to have the ISA should be no more than 1% of the net asset value of the ISA per year, and there must be no other charges payable by the person who owns the ISA.

          Access

          You should be able to deposit small amounts of money – £500 for a lump sum, or at least £50 a month for regular savings.

          Terms

Investment in authorized investment & unit trusts or open-ended investment companies.

At least 50% invested in ISA-qualifying shares & securities listed on European Union stock exchanges.

All units & shares should be have the same buying & selling price

          The risk of this form of investment should be highlighted on any accompanying literature.

          Charges

          The charge to have the ISA should be no more than 3% of the net asset value of the ISA per year, and there must be no other charges payable by the person who owns the ISA.

          Access

          The monthly minimum premium must be no more than £25, or no more than £250 as a lump sum.

          Terms

The surrender value of the policy should reflect the underlying value of the fund’s assets over time.

There must be no penalties associated with surrendering the policy.

          The surrender value after three years should at least return the value of the premium paid.

The above is only a guide, and any additional charges that are associated with the provision of services or the holding of stocks & shares within an ISA should be taken into account when evaluating the suitability of a particular ISA to your needs.