Consumers need guidance on scope of new Lisa product

06 April 2017

Statement from Personal Finance Society chief executive Keith Richards

We welcome the launch of the Lifetime Isa (Lisa) as a bid to get younger people more engaged in savings. The government has put a significant amount of money behind the incentives for the product, and this alone sends a huge signal about the need to save.

However, although we are supportive of any move to encourage younger savers, we must note a potential danger that much publicity around the product could lead to a misunderstanding that a Lisa alone is ‘enough’. We would urge the government and financial services sector to continually make clear the scope of this product so it does not lead to a generation believing they are prepared for their retirement solely on their Lisa savings.

The launch of the Lisa is also a reminder of the importance of financial advice. Employees who qualify for the product will need to know about how the Lisa can fit in with their workplace pension, and how to avoid missing out on employer contributions.

Additionally, as the FCA has previously noted as a concern, consumers could have difficulty deciding whether a Lisa is the best product for them and weighing up the pros and cons of it against a pension or Isa without advice.

Not only that, but when Lisa savers reach the age of 50, they will face a big decision over their savings plans because they will no longer be able to pay into their Lisa.

All this adds up to an overwhelming need for guidance and high quality professional advice around saving. Last month, John Cridland proposed a mid-life financial MOT for all workers, and now this month we are seeing the launch of the Lisa.

This is a great opportunity for the government to join up its savings policy, and introduce a sound system of guidance and advice for consumers alongside the great incentives for the Lisa.