ISAs have become unnecessarily complicated say advisers

The vast majority (84%) of financial advisers questioned in a survey* by AJ Bell believe Individual Savings Accounts (ISAs) have become too complicated.

Three quarters of the advisers questioned think the reason they have become too complicated is because there are too many different versions of ISAs, with nearly a fifth of advisers (17%) saying it was down to Government interference.

Three quarters of advisers also think that a single ISA product could cater for all the client needs the current versions meet.

At the end of July this year, Andy Bell wrote to the Chancellor, Sajid Javid calling for a review of the ISA system in order to simplify it for customers and make it easier for them to invest.  Included with the letter was an AJ Bell policy paper which outlined its vision for ‘One ISA’ and detailed how the existing versions can be consolidated into a single product.  

92% of advisers AJ Bell spoke to support its proposal to consolidate the six current versions of ISAs into One ISA.

The Financial Secretary to the Treasury, John Glen responded to the letter as the minister responsible for this policy area.  In the letter Mr Glen said “the Government is committed to supporting all savers of all incomes and at all stages of life. ISAs are a key part of this support….It is therefore important that the scheme remains simple and sustainable for consumers and savers alike.” 

Mr Glen has asked his officials to set up a meeting with AJ Bell to discuss the One ISA proposals in more detail.

Andy Bell, chief executive at AJ Bell, comments:

“When you take a step back and think about the fact we now have at least six versions of what started out as a very simple product it seems completely absurd.  It is a classic case of product over engineering centred in political point scoring rather than focusing on the needs of customers.

“It’s not too late to change though.  ISAs are still very popular and it would be relatively easy to wind all the current versions back into a single ISA product.  I think this would be an extremely positive and popular change that would be welcomed by consumers, financial advisers and ISA managers.  I also think it can be implemented in a way that is cost neutral to the Government.”

*261 advisers responded to the survey conducted online and at AJ Bell’s ‘On the road’ seminars in September 2019