TISA’s response to the FCA consultation on implementing the Lifetime ISA
TISA, the investments and savings membership association, has welcomed the FCA’s consultation on the amendments to the handbook for the introduction of the Lifetime ISA (LISA).
Jeffrey Mushens, TISA’s Technical Policy Director commented:
“TISA welcomes the LISA as giving additional opportunities to save in a tax efficient way. The success of the Help to Buy ISA shows that there are many people who would take advantage of Government incentives to save. It provides much needed encouragement for those who currently find it hard to save or to consider doing so. It also helps the self-employed and low paid who do not quality for auto enrolment scheme benefits. Our analysis suggests that the age limit of 40 for opening a LISA should be increased in order to benefit this group even more.
The penalty charges
“We want the best outcome for the consumer and are opposed to the FCA adopting any proposals that could hinder that, or place significant cost or other obstacles in the way of savers. We are concerned that the FCA will impose unnecessary costs on the LISA. Over recent months we have argued strongly that the withdrawal penalty charge of five per cent was simply unfair, particularly where no Government bonus would be payable. It’s great news the Government has decided to drop this for the first year, however TISA is committed to seeking a removal of the withdrawal charge.
Transferring a Help to Buy ISA
“We welcome the offer in the first year of transferring and allowing a bonus on all the monies from a Help to Buy ISA. We believe this should be extended to maturing Child Trust Funds (CTF) and Junior ISAs (JISA) in the future. This will build on saving habits and encourage further savings with the boost of the bonus incentive.
LISA-specific information disclosures
“We are also concerned about the cost disclosure provision to show the impact of charges, and which differs from the cost disclosure regime likely to be required under MiFID II and PRIIPs. Any disclosure regime should be consistent across investment products and not specific to LISA.
Cancellation rights for LISA
“TISA supports the proposals for cancellation rights, and in particular the cooling-off period, including transfers of 14 days but notes that the requirement for cancellation or cooling-off for non-advised, execution-only business will impose disproportionate costs to any potential customer benefit.
“We look forward to the FCA’s response to our recommendations. We will continue to work with the Government, industry and trade bodies to ensure that the LISA works for both consumers and the industry.”
On 16 November 2016, the FCA published consultation paper CP16/32, which set out proposed changes to the FCA’s Handbook to reflect the introduction of the Lifetime ISA (LISA) from April 2017. The consultation paper can be downloaded from the FCA’s website.
The consultation closed to responses on 25 January 2017 and the FCA will publish a policy statement containing final rules and guidance in March 2017. ISA managers will be able to offer the LISA from April 2017.
For further information please contact:
Alistair Kellie – Telephone: 0207 680 6558/Email Alistair.Kellie@newgatecomms.com
Sara Neidle – Telephone: 020 7680 6550 / Email Sara.Neidle@newgatecomms.com
Jessica Hodson Walker- Telephone: 020 7680 6538/EmailJessica.HodsonWalker@newgatecomms.com
Notes for Editors
TISA is a not-for-profit membership association operating within the financial services industry. The focus of our recommendations and actions is improved outcomes for consumers and UK plc with this approach leading to a stronger UK financial services industry.
TISA’s growing membership comprises over 150 firms involved in the supply and distribution of savings and investment products and services. These members represent many different sectors of the financial services industry, including asset managers, insurance companies, fund managers, distributors, building societies, investment managers, third party administrators, consultants and advisers, software providers, financial advisers, pension providers, banks and stockbrokers.
TISA has a successful track record in working cooperatively with government, regulators, HMT, DWP and HMRC to improve the performance of the industry and the outcomes for the public. Effective policy and regulation and the creation of efficient industry infrastructure continues to be the major focus for our members. TISA is unique in that it represents the entire financial services industry, incorporating cross-sector policy, industry and technical expertise. Whilst we maintain a solid partnership with government, the regulators and wider industry, we remain independent and develop neutral views and opinions. This impartiality is reflected in our ability to drive development projects which improve industry performance and consumer outcomes, putting us in the unique position of being able to constantly challenge the status quo to bring about material improvement.