Mark Hoban, Treasury financial secretary, has rebuffed calls to allow Isas to invest in Aim listed companies, warning that a move could undermine the Isa brand.
Speaking at a fringe event at the Conservative conference in Birmingham this week, Hoban was asked by a delegate if he intended to extend the investment scope of Isas.
He said: “This is quite a popular cause and I think my predecessor Paul Myners was very keen on it but I have to say I am rather less keen, not because I do not want to support investment into Aim, but I think we need to be very careful about the Isa brand.
“It is seen by many people as a relatively safe form of investment in that people trust it and understand what it does. Given the nature of some of the companies listed on Aim they tend to have a higher-risk profile. My concern would be by extending to include Aim companies, you are at risk of undermining the strength of the Isa brand and that might act as a barrier in future to people putting money into them.” (article continues below)
Hoban’s comments followed renewed calls from Michael Johnson, Centre for Policy Studies research fellow, to look at a merger of the saving regimes for Isas and pensions.
Johnson said the pension industry should be looking to use the success of the Isa brand to encourage younger people to save for their retirement.
He added: “I would urge the Government to include Isas in the auto-enrolment framework.”
David Nish, chief executive of Standard Life, agreed, saying consumers should be given a choice about how they save for the future.
He said: “Soft compulsion in the from of auto enrolment will not achieve maximum inclusion, we have to give some elements of choice such as allowing Isas as a form of pension savings.”