The Financial Conduct Authority (FCA) has today outlined its proposed approach to regulating the promotion and distribution of the Lifetime ISA (LISA).
The introduction of the Lifetime ISA was announced in the 2016 budget and the government intends for it to be available from April 2017. The LISA is designed to allow people under the age of 40 to save or invest flexibly to either provide a deposit for a first home or save for retirement.
The FCA is proposing to regulate the LISA in the same way as other ISA products, with some additional protections designed to reflect the dual purpose of a LISA and the restrictions on accessing funds.
The LISA will play a role in helping individuals save for either their first home or retirement. However, like any other product there can be risks to consumers. These new rules will help to make sure that consumers are protected.
Firms will be required to give specific risk warnings at the point of sale which include reminding consumers of the importance of ensuring an appropriate mix of assets is held in the LISA. Firms will also have to remind consumers of the early withdrawal charge and any other charges.
The FCA has proposed that providers will have to offer a 30 day cancellation period after selling the LISA.
Notes to editors
- Consultation Paper - CP16/32: Handbook changes to reflect the introduction of the Lifetime ISA.
- On 1 April 2013, the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
- The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
- Find out more information about the FCA.