The Treasury is set to launch a consultation on ISA reform in the coming weeks, according to a Financial Times report.
ISA reform was first mooted in chancellor Rachel Reeves’ (pictured) Spring Statement, though detail was light with the government only committed to ‘look at options’ to improve the framework.
However, the FT said the Treasury is preparing to launch a consultation which will gather industry feedback, with the government likely to seek ways to encourage investors to move money into stocks and shares from cash ISA.
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According to investment platform AJ Bell, £100bn is held by people with £20,000 or more in cash ISAs who have not invested in Stocks and Shares ISAs.
Michael Summersgill, the firm’s CEO, said: “ISAs have grown to become incredibly popular, with over 22 million ISA holders in the UK. But over time a patchwork quilt of ISA products has emerged, each with their own rules and regulations. Starting with a blank sheet of paper, nobody would design the system we have now.”
“The key to unlocking that investment has to involve simplification,” he added. “Gimmicks like the ill-fated UK ISA, rightly kiboshed by the chancellor, often sound like an attractive political soundbite.
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“But they’re destined to fail. Trying to corral consumers into UK investments by introducing new products, restricting Cash ISA limits or introducing mandatory investment quotas will only add complexity and leave consumers lost in an increasingly complex web of saving and investing rules.
“Reducing complexity and simplifying consumer choice by merging Cash ISAs and Stocks and Shares ISAs into a single account would create a more fluid landscape in which providers could combine the benefits of cash saving and investing with a single product wrapper.”
This story was written by our sister title, Portfolio Adviser
