Investment company Lightyear has entered the UK’s ISA market with the launch of a 4.75% Cash Individual Savings Account (ISA) and a Stocks & Shares ISA.
Lightyear’s launch is designed to help British savers and investors grow more of their money, in light of shocking research that reveals the billions of pounds every year currently wasted on unnecessary high fees from big players in the market.
Simple and user friendly, both of Lightyear’s ISAs come with no withdrawal penalties (such as surprise rate drops after you withdraw), no minimum deposit, and a high level of flexibility – the ability to pay in and out without losing your annual allowance.
With no account, subscription or custody fees, Lightyear’s Stocks & Shares ISA will be 10 times cheaper than the average market provider over 10 years (research conducted by Capital Economics) and its Cash ISA will give Brits easy access to the Bank of England base rate (4.75%) for their savings.
Stocks & Shares ISAs: £850 million wasted every year in account fees
Research conducted by the independent macroeconomic research firm Capital Economics and commissioned by Lightyear revealed that Stocks & Shares ISA holders across the UK pay £854 million in unnecessary account fees each year. With account fees, on top of transaction and currency fees, a typical Stocks and Shares ISA holder will pay over £2,400 each on average over 10 years.
According to the independent research findings, Lightyear’s Stocks and Shares ISA will be 10 times cheaper than the market average, charging just £240 over this ten year time frame for the same activity. Over 25 years – due to the compounding impact of fees – each ISA holder would pay 16 times less with Lightyear than with the average market provider (£670 vs £11,000).
Cash ISAs: £3 billion in unpaid interest lost each year
When it comes to Cash ISAs, Lightyear’s own analysis of recent Bank of England and HMRC data shows that 20% of UK household’s deposits sit in cash ISAs. However, there’s a deficit of £3.4 billion in interest across the UK that’s not paid out to customers. This is due to the difference between the base rate that the Bank of England pays banks (4.75%), and the average interest rate that’s actually paid out: 3.6%.
Worse still, if you dive specifically into variable rate cash ISAs (vs those that opt for a fixed rate ISA), the interest rate passed on is just 1.8%. This number has been rapidly declining, and is the lowest rate in 2 years. It results in £481 missed in interest per person each year.
“ISA market is a lottery”
Over 70% of ISA holders use traditional banks and brokers for their ISAs; just a small proportion use fintechs and neobrokers. Lightyear is launching its ISAs to compete with the legacy providers – but offering lower fees, more flexibility, higher rates and fewer caveats.
Wander Rutgers, COO and UK CEO at Lightyear: “We’re launching ISAs today to help everyone in the UK find financial freedom faster. At the moment the ISA market is a lottery: most Brits sleepwalk into this lottery by opening an ISA with whoever they’ve been banking with since they were a kid. There’s a real herd mentality where everyone believes the right thing is to save and invest with an incumbent bank or broker. This means people rarely shop around, and just accept whatever rate they’re given, or whatever fee they’re hit with. Money which is going straight into the pockets of the providers, instead of to them.”
The company’s Cash ISA pays 4.75% AER – it matches the Bank of England rate so customers always know what they’re getting. Moving away from gimmicks and bonus rates that disappear, Lightyear says its Cash ISA is here to stop savers having to endlessly rate shop around or worry about surprise rate drops if they need to withdraw some funds.
Lightyear’s survey on its own customers, showed that the most important feature for a cash ISA was the interest rate, with 97% of respondents with Cash ISAs selecting this as important.
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The Stocks and Shares ISA has the same pricing that Lightyear customers currently enjoy on their general investment accounts: no execution fees for Exchange Traded Funds, up to £/$/€1 max per trade and a 0.35% FX fee if you invest outside GBP. Customers can also earn 4.84% AER interest (as of 20.01.25, variable) in their Stocks & Shares ISA through Lightyear’s popular ‘Vaults’ product, where money is invested in BlackRock money market funds.
There are no account, subscription or custody fees in the ISA. When Lightyear surveyed Stocks & Shares ISA holders in the UK, 77% found low fees important. In Lightyear’s own customer survey, ‘no subscription fee’ ranked as the most important feature by those with Stocks & Shares ISAs.
Rutgers added:
“As for people using the newer fintech options; they’re still entering a lottery. If completely ‘free’ providers don’t have lots of sneaky caveats, you can bet that they’re cross subsidising these too-good-to-be-true ISAs with risky gambling-like products, so sustainability strategies come into question here because you can see they rely on making money from taking bets against their customers. Lightyear is firmly against this ‘casino-style’ approach. Our new ISAs are suited for customers using the big high street banks and brokers, but the key difference: a delightful experience, no unfair fees, and fair interest.”
To start 2025 with a bang, Lightyear is re-launching its UK business for both consumers and businesses with FSCS protection and ISAs. UK residents can sign up to Lightyear UK and open a general investment account, a business account, a Stocks & Shares ISA as well as a Cash ISA. From today, ISA holders can also transfer holdings over to Lightyear.
Since launch, Lightyear has raised over $35 million from a range of top venture capital firms and individual investors including Virgin Group and Lightspeed Venture Partners, and expanded across 22 markets in Europe. It received direct authorisation from the Financial Conduct Authority (FCA) in September 2024, and has spent the past few months getting ISAs ready before the end of the UK tax year – which closes on the 6th April 2025.
