While the Government has considered several measures to encourage savers to invest their cash, including cutting the annual cash Isa limit, leading mutual Scottish Friendly says it needs to go further if it is to change the nation’s mindset. This means introducing measures that tackle the main barriers to investing for most people.
Scottish Friendly’s own research reveals that 26% of British adults are ‘nervous’ about investing, 16% feel ‘overwhelmed’ and 10% describe themselves as ‘terrified’.
Among non-investors, the biggest deterrent is the fear of losing money (34%), followed by the fear of making the wrong decisions (26%), not having enough money (24%) and concerns over market volatility (20%).
Ahead of the Mansion House speech, on 14 July, Scottish Friendly is therefore calling on the Government to:
Tackle savers' core fears directly through its "Savvy Squirrel" campaign, which is designed to encourage more people into markets.
Act on the Risk Warning Review's recommendations and soften disclosure rules that require investment firms to warn of potential losses.
Commission a review into how the tax system could do more to encourage stock market investment more broadly, particularly in domestic equities.
Simplify the Isa regime to make it easier for savers to become investors.
Stephen McGee, CEO at Scottish Friendly, said: “The Government is right to aspire for the UK to become a nation of investors, but achieving that will take a multi-pronged approach that gets to the root of savers' fears. People avoid the stock market because they don't understand ISAs, they're scared of losing money and there's little support to help them understand and manage that risk.
"We also need a regulatory regime that encourages investing rather than discourages it. Potential investors are constantly bombarded with warnings that they could lose money, which doesn’t help. It’s a bit like a car salesman warning you the car might break down before you've even bought it. It's little wonder people walk away.
"If the Government is serious about turning us into a nation of investors, it needs to go a lot further. That means tackling fear head-on through campaigns like Savvy Squirrel, easing disclosure rules and using the tax system properly to encourage long-term investment in UK companies. Bold rhetoric is easy. Bold policy is harder – and that's what's needed here."
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