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The London-listed trading and investing platform IG Group has broken ranks with industry rivals by backing Rachel Reeves’s plans to overhaul Britain’s most popular savings product.
Sky News has seen a letter from Michael Healy, the UK managing director of IG Group, in which he argues that cash ISAs “have become too popular relative to their economic utility, serving for too long as the default for savings despite yielding poor long-term returns and contributing little to productive investment or individual wealth accumulation”.
His letter to the chancellor was sent earlier this week, days after rival AJ Bell lambasted the Treasury’s move to cut the cash ISA limit from £20,000 to £12,000 next year, saying the proposals were “doomed to fail in their aim of encouraging more people to invest for the long term”.
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A heated meeting between industry players and officials from the Treasury and HM Revenue and Customs last week saw a deluge of criticism of the proposed reforms.
However, Mr Healy, whose company has roughly 900,000 customers in the UK, said rivals’ views were “symbolic of a deeper reluctance within parts of our industry to embrace change, even when the status quo is demonstrably failing most people in the UK as well as the economy”.
“There remains a strong instinct to defend existing structures, irrespective of their long-term efficacy,” Mr Healy wrote.
He argued that cash ISAs should be phased out altogether, rather than simply having their annual allowance curtailed.
And he said that industry peers were deliberately mischaracterising the intention of the government’s proposals.
“Suggestions that the reforms will perversely drive people into Cash ISAs ahead of the change miss the fundamental point.
“Policy nudges are exactly what is required to shift this equilibrium, and savers are not left without options – Premium Bonds remain available, and older savers, who…
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