Industry calls for Lifetime Isa delay

Technology-Binary-Data-Tech-Code-700.jpgBanks and fund groups are warning the Government’s failure to provide key details around the Lifetime Isa mean they will not be able to launch products in time for the April deadline.

The Financial Times reports providers say they are waiting for critical information on how the Lifetime Isa will work in practice, such as account design, contribution limits and how the bonus will be paid.

There is also uncertainty about whether savers will be able to borrow from their pot without a penalty charge.

Former chancellor George Osborne set out the plans for Lifetime Isa in his Budget speech in March.

The plan is from next April, any saver under 40 years old will be able to save £4,000 a year into a Lifetime Isa and will receive a 25 per cent Government bonus.

Funds can be withdrawn to a buy a first home worth up to £450,000, or can be retained until aged 60 when the pot can be withdrawn tax-free.

Standard Life has decided not to offer the Lifetime Isa next April.

The provider says: “In addition to receiving full requirements from the Treasury and HM Revenue & Customs, we feel engagement with the FCA on how the product will be regulated is essential to the successful launch of the product.

“At present we do not feel there is sufficient time to properly do this and launch next April.”

Aegon pensions director Steven Cameron says: “We had expected to have full details by June/July. It is looking increasingly unlikely that we or other providers will be able to research, design and deliver a product by next April.”

Fidelity told the FT there is a “good case” for delaying the launch of the Lifetime Isa, while HSBC and Lloyds Banking Group could not confirm whether they would be offering the products from April.

The Treasury told the newspaper the Lifetime Isa would be available from April 2017 “as announced in the Budget”, and added full details would be set out in the autumn.