Isa sales slumped in Sept-ember to show a net outflow for the first time since their introduction in 1999, according to IMA figures.
A net Isa outflow of £23.5m followed the lowest recorded inflow of £25m in August. Isas saw a net inflow of £259.5m in September last year.
Gross sales fell from £442m in September 2003 to £349m last month.
The IMA says the outflow is due to tax benefits removed from Isas in the last Budget. It is matched by an overall drop-off in retail sales of investment products.
In September 2003, £558.9mworth of investment funds were sold compared with £265.8m last month.
Intermediaries were res-ponsible for 74 per cent of gross retail sales, with UK all companies the most popular sector.
The number of regular savings plans fell to 1.56 million in the third quarter from 1.6 million in the second quarter. Isa plans also fell by 2 per cent in the third quarter to 1.3 million.
Chief executive Richard Saunders says: “Despite stronger markets in September, investor confidence remains low. The first net outflow we have recorded from Isas shows that efforts to attract investors back to the market are not yet succeeding.
“The reasons are many and complex but are likely to inc-lude continuing uncertainty about investment prospects, higher interest rates and red-uced tax benefits.”