While spring cleaning and buying Easter eggs may be on many people’s to-do lists this month, another priority for savers – as the new tax year on April 6 approaches – will be to review ISA savings.
There are various considerations when choosing an ISA – whether you want cash savings or investments, the returns you’re aiming for, and how easily you can access your money. It’s also worth bearing in mind that investments, while offering higher potential returns, also have risks, and you may not get back what you put in.
ISAs can be very attractive to savers, as money held in them is ring-fenced from the taxman, for as long as it remains within its ISA “wrapper”.
As well as the potential returns, ethical considerations may also be important to savers when considering where to put their money.
Roger Hattam, director of retail banking at Triodos Bank UK, says savings and investments are used by banks and investment providers to finance other organisations through investing or lending to them. Triodos publishes details of the organisations it finances on its website.
He adds: “More and more of us are questioning exactly what our banks are funding and want to ensure our money is driving positive change.”
Hattam says: “Collectively, even a small amount in an ISA with a sustainable provider adds up to the wave of investment in green finance, moving money away from the sectors that are destroying the planet, into those that are helping secure a more sustainable future for all of us.”
Here are Hattam’s top tips when looking for a sustainable and ethical ISA:
1. Know what you want – and ask questions
“Everyone has different values, and a different ‘red line’,” says Hattam.
“Knowing how you want – and don’t want – your money to be used is the first step towards having control over it. Does the bank you’re considering have a clear policy on fossil fuels, human rights or deforestation? If you’re passionate about it, ask them what their stance on it is.”
2. Look for independent guides
Hattam highlights guides given by organisations such as Which? and Ethical Consumer.
Providers may be ranked on their sustainable and ethical criteria.
Hattam adds: “Looking at providers that are accredited as B Corporations is also a good way of finding providers that can demonstrate sustainable and ethical practices across their entire operation.”
3. Beware of ‘greenwashing’
In a world where it’s fashionable to make claims about sustainability and green credentials, it’s important to separate the hype from the reality – so take time to do your research into providers.
Around six in 10 (59%) of consumers are concerned about greenwashing in financial services, according to a survey in February for Triodos Bank.
The regulator has been working to put a simple regime in place, so investors can judge whether funds meet their needs.
Last year, the Financial Conduct Authority (FCA) confirmed plans for a package of measures to improve the transparency of sustainable investment products and minimise greenwashing.
An anti-greenwashing rule, to make sure sustainability-related claims are fair, clear and not misleading, will come into force from May 31.
The watchdog is also introducing investment product labels from July 31, to help investors understand what their money is being used for.
