The FCA has today published a consultation on new consumer protection disclosures for the Lifetime ISA. From Tom McPhail, Hargreaves Landown.

Currently, ISA disclosures are predominantly based on the underlying investments or savings held within the wrapper. The proposal is to add additional disclosures to help prevent consumers making the wrong wrapper choice under five headings: Complexity, Contributions, Investments, Access and Tax.

Tom McPhail, Head of Retirement Policy, Hargreaves Lansdown; “Young investors looking to get on the property ladder and to save for their future will welcome the launch of the Lifetime ISA in April next year. Since the policy was announced, we have seen evidence of strong demand and enthusiasm for the unique combination of terms offered by the LISA.”

“LISA providers such as Hargreaves Lansdown are already adept at helping savers and investors to make good decisions with their money. The FCA is clearly mindful of the importance of good, clear communication around the LISA. The measures they have proposed here look sensible and are consistent with the types of financial education and communication we have been developing for LISA investors ahead of launching in April next year.”

Comment from the FCA: “Our rules aim to help investors make choices in relation to the LISA in line with their needs. More specifically, our rules aim to curb the following risks of:

investors reducing savings in pension products over their working life below the level in line with their long-term needs investors losing an employer contribution when withdrawing from, or choosing not to enter, auto-enrolment schemes investors withdrawing money before age 60 without buying a home, hence paying the 25 percent early withdrawal charge; and investors entering saving or investment choices (e.g. shares, cash, hybrid) that are not in line with their long-term needs”.