Aegon has criticised the government’s UK Isa proposal ahead of the HM Treasury consultation deadline this Thursday, 6 June.
Pensions director Steven Cameron issued a response on the firm’s behalf. He said the proposed product will fail to meet government objectives or generate wider consumer demand.
“The UK Isa, as proposed in the HM Treasury consultation, is unlikely to deliver any significant boost to investment in UK businesses and will also fail to have widespread appeal with consumers,” he said.
“With the Treasury unlikely to review responses ahead of the election, we hope whoever is in power on 5 July will be open to exploring alternatives.
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“We understand why any future Government would wish to encourage greater investment by UK retail investors in the UK economy. But the global reach of UK stockmarket means investing in UK listed companies isn’t necessarily the same as investing in the UK.”
He also noted the target market for the UK Isa will be the ‘small proportion’ of retail investors who regularly max out their current Isa allowance in stocks and shares Isas and who are particularly attracted to UK investments.
Cameron said there may be ‘alternative approaches’ which would attract a wider range of UK retail investors to ‘buy British’ such as requiring all retail funds and products to provide clear upfront disclosures of the proportion of UK investments held.
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“We urge HM Treasury to consider fully how the new product will fit with FCA Consumer Duty requirements,” Cameron added.
“This includes designing a product for a specific target market and avoiding foreseeable harm, which could easily be caused if customers were allowed to transfer general Isas into the UK Isa and then be ‘stuck’ with no ability to transfer back. It also requires firms to ensure fair value making it important to avoid creating costly new monitoring obligations on any party.”
