Richard Butcher, Managing Director at PTL, said: “Like many, we welcome the introduction of the LISA. Any tool designed to encourage long term savings is a positive development in the context of declining pension adequacy resulting from the death of defined benefit and low levels of defined contributions. That being said, the LISA is attempting to fill two diametrically opposing roles; a tool for short/medium term investment saving towards a house deposit and a tool for long term savings toward retirement.
“These two objectives imply significantly different investment strategies however, and if the consumer (particularly one who does not understand investments) changes their objectives for LISA, the strategy will no longer be relevant and may do damage to the expected outcome of long term savings. Whilst PTL identifies the FCA’s attempts to mitigate this risk through the use of financial advice, our experience (in the context of workplace pensions) is that even with disclosure, education and relevant reminders, only a small proportion of consumers will be able to make informed investment decisions.”
Butcher continued: “The solution to this problem is, in our view, obvious: a formal independent governance function built into the delivery mechanism as with workplace pensions. For pensions, this function (trustees and IGCs for example) is responsible for driving value for money for members, challenging and controlling costs, ensuring core financial transactions are processed promptly and accurately and that the investment strategies are likely to be (and remain) appropriate. Here’s hoping the FCA take this into consideration so that consumers will be reaping the intended benefits of the LISA”.
|
