UK finance industry slams government's cash ISA plans

The UK's financial services industry has panned the government's plans to encourage greater retail investment through changes to the cash ISA, a damning new survey has found.

The Personal Finance and Investment Management Association (PIMFA) surveyed members and found just 7 per cent believe the government’s decision to cut the cash ISA allowance to £12,000 will encourage savers to invest.

Meanwhile, the majority (62 per cent) of firms said they don't believe that restricting investors’ ability to hold cash within a stocks and shares ISA will make the ISA regime any more successful.

Meanwhile, only 40 per cent said they agreed that the Government’s ambition to increase retail investment in UK equities is a realistic and desirable policy objective.

Simon Harrington, head of public affairs at PIMFA, said: “Building a culture of retail investment within the UK is a worthy goal and one that we fully support. The UK has £430bn sitting in cash deposits and lags behind other G7 countries in terms of direct exposure to equities.

“However, our members and we are not convinced that the government’s proposed changes to the ISA regime will have a demonstrable impact in building a culture of retail investment. More generally, we are extremely concerned that rather than support and encourage savers to take advantage of the Stocks and Shares ISA wrapper, these proposals will actually undermine it.