The boss of blue-blooded investment firm Schroders launched an attack on cash Isas used by millions of ordinary savers as the City pushes to grab a bigger slice of the funds.
Richard Oldfield said the £20,000 upper limit for investing in a tax-free cash individual savings account (ISA) should be reduced – amid pressure by fund managers to divert more of the money into shares.
Chancellor Rachel Reeves is being lobbied by the City to change the rules ahead of her mini-Budget this month in a bid to boost growth. It is thought the limit could be cut from £20,000 a year to £4,000.
But the Mail’s Hands off our cash Isas campaign is standing up for savers who have nearly £300billion invested in the accounts.
Building societies are opposed to the changes. They receive much of their funding via cash Isas and say reducing them will mean pricier mortgages for home buyers.
Yesterday, the boss of Nottingham Building Society became the latest to speak out against changing the cash Isa limits.
Investment drive: Schroders boss Richard Oldfield (pictured) said the £20,000 upper limit for investing in a tax-free cash individual savings account should be reduced
But Oldfield argued that it was an ‘anomaly’ that the current limit for saving in cash Isas should be the same as that for stocks and share Isas.
He said: ‘I know having cash Isas is really important for certain segments of the country and we’ve got to continue to support that. But I would advocate for having a reduced Isa limit. The debate is by how much.’
Currently, savers can put as much as £20,000 a year into tax-free Isa accounts. The sum may be all in cash or all in shares or a combination of both.
Advocates of reform say that encouraging more of the money to go into share accounts could help boost the stock market and encourage growth. And they say that it would be a better for savers, generating higher returns.
Some, including the Chancellor, think the UK should aspire to an investing culture similar to that in the US where ordinary households invest much more of their money in the markets.
Oldfield said: ‘We all accept that we need to grow the UK economy. And to grow the UK economy we probably need more risk-taking than we have today.
‘No one is going to argue with that. If we take the amount of money that goes into Isas, that is a huge tax credit that we’re all paying for and at the moment a large portion of that is going into cash Isas.
‘Over any time period that creates a worse investment outcome for our clients than actually having it in an investment Isa.
‘So I think it is a really important debate to have. Having the levels equal is a bit of an anomaly.’
But opponents say many savers do not want to gamble on what they see as risky market bets.
Sue Hayes, chief executive of Nottingham Building Society, said yesterday: ‘We believe it is important to enable a market where saving is encouraged and incentivised and alongside other societies, we advocate for the current cash Isa regulations to be maintained.’
Last week, Leeds Building Society’s chief executive Richard Fearon added his voice to the opposition, saying that hundreds of customers had raised concerns, with many believing it would be ‘unfair’ to change the rules.
‘They like that their money goes towards helping others buy a home,’ Fearon said.
‘They don’t want to invest in stocks and shares and they feel they will be penalised for saving.’
Skipton Building Society and Nationwide have also urged Reeves to protect cash Isas.
Schroders will axe jobs as it seeks to cut costs by £150m a year and increases its reliance on artificial intelligence.
Finance chief Meagan Burnett said it would ‘definitely have fewer employees later this year’ but gave no figure. It employs 6,300 people worldwide and 3,600 in the UK.
Clients pulled £4.7billion from funds in 2024 compared to inflows of £1billion the year before, underlining the pressure on the business.
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