Plenty of headlines this week proclaiming that the banks and building societies have snubbed the launch of the highly anticipated Lifetime Isa, or Lisa as it’s known, but are the headlines true and if so why?
The Lisa is aimed squarely at those wanting to save for a house or for retirement and represents the flagship of the government’s saving programme (2). The scheme was designed by former Chancellor George Osborne, and offers savers a government bonus of £1,000 a year, if they deposit the maximum of £4,000. However savers will lose 25% of everything they take out of it, unless it is to buy a house or have reached the age of 60 (1).
Despite the planning and considerable publicity that has gone into the new scheme none of the UK’s banks or building societies were offering Lisas on the day of launch (3). The plan had been that from 6 April, those between the ages of 18 and 39 would be able to open a Lisa cash savings account on the high street.
The reasons given by the banks and building societies were either that they weren’t ready to offer the new Lifetime Isa or they had considered it but preferred the existing Help to Buy Isa. Further criticism included the complexity of the scheme and that it might stop people saving in to a pension (1).
The BBC reported that only three providers will offer the Lisa in April, and they are investment platform operating a stocks and shares version only. One of them – Hargreaves Lansdown – said 1,000 accounts had been opened by mid-day on Thursday (1).
Hannah Maundrell from Money.co.uk described the launch as “… a bit of a damp squib” going on to say “Yet again the government has promised consumers the chance of a shiny new savings vehicle without consulting with the industry on how and when they can deliver it.”
The Treasury responded to concerns by pointing out that other providers had already announced plans to launch Lisas, this includes The Skipton Building Society which is planning to issue a product in June (1).
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