A new individual savings account (ISA) has been launched by Friends Provident for those wishing to take advantage of tax-free ISA allowances.

The Friends ISA offers an annual charge of 1.25 per cent with no initial charge.

Mini ISAs can be opened with an investment of £4,000 and £7,000 for maxi ISAs. A broad range of multi-manager funds and a selection of sector-specific fund options can be used to adapt the savings products to the individual risk profile of the investor.

Funds can be changed up to 12 times a year without penalty. Loyalty bonuses apply if no withdrawals are made from the savings account.

A bonus of 0.5 per cent is added to the investment if the savings account is held for seven years. An increase of one per cent applies on the tenth anniversary of the savings account, provided no withdrawals were made.

Friends Provident is delighted to launch this savings account, following the reclassification of Life ISAs earlier this year, says investment marketing manager, Jim Henning.

The Friends ISA has been designed to reward those investors who remain invested for the long-term to maximise tax efficiency and provide sensible portfolio diversification, Mr Henning adds.

The savings account is open to new and existing ISA investors who may want to transfer their accounts.

Upon the death of the ISA holder, 101 per cent of the policy value will be paid out.