The Finance Committee is frustrated that the government has not set a timeline for changing the lifelong ISA before the November budget – it calls it a “chaotic product that needs reform”.
In the committee’s June report on Lisa, the product was “to targeting people who really need financial support”, which is “not believing.”
It added that the product could cause customers to put their savings at risk and may not be the best use of public funds.
Members of Congress also found that Lisa’s dual goal is to help people buy homes in the short term and save money in the long term, which makes it “more likely for consumers to choose inappropriate investment strategies.”
The product was launched in 2017 and allows people under 40 to open a Lisa that can accommodate up to £4,000 a year until they are 50 years old. At the end of each tax year, this is the 25% bonus of HMRC. It has a threshold of £450,000 on buying a home.
The plan also allows clients to save on retirement.
Members of Congress called for Lisa’s savings to be processed in ways other pension savings related to the Universal Credit Test.
But the commission said it did not see any real evidence of the government’s Lisa reform, which was needed before the November 26 budget.
It said: “In the absence of such reform, the Commission believes that Lisa should be marked as inferior products and includes anyone who warned that they might be detrimental to anyone who might one day claim universal credit.
“While the government is welcome to consider including such a warning, it is not sufficient to address the specific commitment of the issue.”
Finance Committee Chairman Dame Meg Hillier (pictured) added: “The government has taken some steps to improve the ISA’s life, but I don’t think they are far enough.
“ISA’s life is a chaotic product that needs reform.”
“According to a sample of Lisa’s owners, 87% of the people who used Lisa to buy their first home said they could do that without Lisa.
“Given that Lisa is expected to cost the government £3 billion over the next five years, this raises the question whether this is whether Lisa makes good use of taxpayers’ money.”
“The government has the opportunity to rethink Lisa on its budget because it may be first-time home buyers and those who save for retirement,” Hillier noted.
