Limited support for Govt’s ISA reforms among wealth managers – PIMFA

Wealth management and financial advice firms are doubtful over the impact of the Government’s ISA reforms, a new study by the Personal Investment Management & Financial Advice Association (PIMFA) has indicated.

Data from the second iteration of PIMFA’s Regulatory Insights Tracker suggested that the decision to cut the Cash ISA allowance remains a key source of contention.

PIMFA’s findings, based on data collected from 56 member firms, revealed that 36 per cent believe the cut will have the greatest impact on retail investor behaviour, the most cited reason. However, just seven per cent of firms believe the move will encourage savers to become investors, which PIMFA suggested could mean the policy alone is unlikely to drive a meaningful shift in behaviour.

The study also showed that PIMFA member firms remain divided over the Government’s ambition to increase retail investment in UK equities specifically.

When asked whether this is a realistic and desirable policy objective, just 41 per cent of firms agreed. At the same time, the data revealed that 43 per cent of firms held no strong view, suggesting that many remain uncertain.

Head of public affairs at PIMFA, Simon Harrington, commented that the trade body remains supportive of many of the initiatives which have been introduced to “transform a nation of savers into a nation of investors”.

However, Harrington stated: “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.

“We think it’s right that greater retail investor access has been prioritised by this Government. We think that increasing awareness through campaigns such as the Invest for the Future campaign could positively affect consumer attitudes in the long term.

“But we also know that investors crave stability and are wary of excessive intervention. Such a significant one, targeted at such a small population of savers and investors, risks undermining many of the positive steps taken in pursuit of delivering greater retail access.”

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