Investment company Lightyear has entered the UKâs ISA market with the launch of a new Cash Individual Savings Account (ISA) and Stocks and Shares ISA, in a move to help British savers and investors grow more of their money.
Lightyear is re-launching its UK business with FSCS protection and ISAs. Both of the new Lightyear ISA offerings come with no withdrawal penalties (such as surprise rate drops after you withdraw), no minimum deposit, and ultimate flexibility â the ability to pay in and out without losing your annual allowance.
In a survey in 2024, Lightyear found that over 70 per cent of ISA holders use traditional banks and brokers for their ISAs; just a small proportion use fintechs and neobrokers. Lightyear hopes its ISAs will compete with legacy providers by offering lower fees, more flexibility, and higher rates.
Customers can earn around 4.84 per cent AER interest (variable) in their Stocks and Shares ISA through Lightyearâs popular âVaultsâ product, where money is invested in BlackRock money market funds.
âAt the moment the market is a lottery: most Brits sleepwalk into this lottery by opening an ISA with whoever theyâve been banking with since they were a kid,â said Wander Rutgers, COO and UK CEO at Lightyear. âThereâs a real herd mentality where everyone believes the right thing is to save and invest with an incumbent bank or broker, which means people rarely shop around and just accept whatever rate theyâre given or whatever fee theyâre hit with. So their money goes straight into the pockets of the providers, instead of to them.
âAs for the minority using the newer fintech options; theyâre still entering a lottery. You can bet these providers are cross-subsidising their too-good-to-be-true ISAs with gambling-like products, raising red flags about their sustainability strategies as theyâre relying on revenue from betting against their customers. Lightyear is firmly against this âcasino-styleâ approach.â
Prioritising customer needs
Research commissioned by Lightyear and conducted by independent macroeconomic research firm Capital Economics found that Lightyearâs product is around 10 times cheaper than the market average over 10 years.
Another Lightyear survey of its customers showed that the most important feature for a cash ISA was the interest rate, with 97 per cent of respondents with Cash ISAs selecting this as important.
Adrian Radu, partner at global VC Lightspeed, an investor in Lightyear, commented: âFinancial markets are still full of unfair fees that slow down people wanting to build their wealth. Lightyearâs growth has been impressive since we invested in them in 2022, and their launch of ISAs today is going to accelerate this rapidly. Lightyear is fixing the wealth gap by providing products that prioritise customer needs, something which a lot of traditional finance institutions greedily ignore.â
Since launch, Lightyear has raised over $35million 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 FCA in September 2024, and spent the past few months getting ISAs ready before the end of the UK tax year â which closes on the 6 April 2025.
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