Total UK ISA net sales reached £31.7 million in February compared with an outflow of £68.4 million in January and an £88.1 million inflow in February 2007.

The IMA found that stocks and shares ISAs totalled just £0.8 billion in the first ten months of the 2007/08 tax year. Although this does not include the busy March/April period, when activity is normally higher, it appears that the credit crunch is seriously taking its toll on stocks and shares ISAs.

Even if the level of overall ISA investment seen in March and the first week of April last year (£0.9 billion) was matched for the corresponding period this year, investment would still be around the record low reported in fiscal 2004/05. And experts fear there was little evidence to suggest high sales levels for the five-week period; indeed, estimates of a 10 per cent annual decline dominate.

Despite this, director of markets, Jane Lowe, remains positive. “This month sees positive sales figures for both overall net retail sales and ISAs,” she says.

“Although it is too early to tell, these modest figures may indicate that consumers’ investment in funds has settled down, following the asset switching taking place over the last few months. Only time will tell if long-term confidence has returned.”

Nevertheless, Fidelity FundsNetwork believes the Government should have made bigger changes to ISA rules before the April deadline. It feels the annual investment allowance should have been £10,000 rather than £7,200 and claims that if the ISA limit had risen in line with the rate of inflation, it would now be above £8,900.

Head of Fidelity FundsNetwork, David Dalton-Brown, says: “There is a mismatch between the government’s stated aims and their actions – while encouraging people to save for the future, the support and facilities that consumers need to do so are simply not there.

“The annual ISA allowance falls far short of what we believe it should be – either an increased limit to £10,000 or some commitment from the Government that the limit will increase on an annual basis.”

© Fair Investment Company Ltd