Call for ISA reforms as half of Brits stop investing
ISA reforms and improved financial education are essential to ensure the financial future of millions of Brits, new research has found.
According to a report from online investment platform InvestEngine, more than half (56 per cent) of UK adults have stopped saving or investing amid the cost of living crisis.
However, ahead of the Autumn Statement, the platform is calling for a series of ISA reforms which it believes will help to encourage more investment.
“Change is badly needed, both in terms of our culture towards personal finances and in the role that industry and government can play in facilitating that change,” said Andrew Prosser, head of investments at InvestEngine.
Read more: easyMoney chief says investors are attracted to IFISAs in uncertain times
“As the Autumn Statement approaches, we’re encouraged to see the UK government exploring ways to simplify the ISA landscape to make it easier for people to save and invest, but there needs to be further action to simplify the system and boost financial literacy.
“This will be crucial if we’re to ensure more people can achieve greater financial security later in life.”
InvestEngine has suggested introducing a single, all-purpose ISA account for both cash savings and stocks and shares which will simplify the process of moving funds into investments and avoid confusion over managing multiple accounts.
The platform also wants the chancellor to rename ISAs to ‘tax free accounts’ to make clear the main benefits of using them in order to increase engagement.
It also wants to bring pensions and investments under a single ‘investing’ banner, and to boost financial education from an earlier age.
Read more: Future of the IFISA in doubt
The platform’s research found that the UK lags behind the rest of Europe when it comes to financial knowledge. Almost half (48 per cent) of adults in Germany said they would prefer to invest their money than save it, compared to only a third (33 per cent) of adults in the UK.
Germans were also more likely to have knowledge of different types of investment products compared to Brits.
More than half (55 per cent) of adults in the UK either disagreed or were uncertain if investing money offered better long-term returns than cash savings, despite evidence showing this to be the case. And almost two thirds (61 per cent) said that their own education did not equip them with enough understanding of how to invest their money.
73 per cent of adults aged 35-54 said they wish they’d started investing or saving at a younger age.
Read more: IFISA “still a viable product”
