In another late night ‘TEA with me’ I update us on the latest regarding the Cash ISA allowance debate, which accelerated my lobbying of Chancellor Rachel Reeves via my 9-page letter to her (which you can read here).
Importantly, I confirm my support for UK individuals having more ‘skin in the game’, i.e., stepping up their personal investments in UK-listed businesses by buying shares in these companies. However, the solution for this is not the cutting of Cash ISA allowance, as City firms are calling for.
According to this FT article, three firms involved with the Capital Markets Industry Taskforce (CMIT), Phoenix Group, Schroders and the London Stock Exchange, as well as Peel Hunt, are calling for the said cut - contrary to the wishes of the masses, building societies, and newspapers like the This is Money / The Daily Mail.
As I have expressed in my letter to Rachel Reeves, retail shareholders MUST have a say on all matters that directly impact us. Institutions do NOT automatically speak for individuals, especially given their seemingly self-serving agendas that are at odds with everyday savers and DIY investors. I see at least four problems with the debate that City firms are forcing, and these form the premise of the video along with the imporatace of retail shareholder representation:
Reducing Cash ISA allowance disadvantages those individuals, e.g., older pensioners, who need lower risk investing strategies.
Cutting Cash ISA allowance does NOT guarantee that the funds that would have been invested in cash will flow automatically into UK equities. Naive to even think this. UK stamp duty is a continuous deterrent. No stamp duty on US stocks and the allure of price action will still likely outweigh investors' decisions to invest overseas unless greater incentives and/or a proactive and continuous individual investor engagement campaigns are implemented.
Any promotion for increased equity investing MUST be accompanied by a widespread or universal financial education program to equip and empower the individual investor into investing success. No financial education program is like sending a kid to the frontline with no armour.
As several building societies have already pointed out, Cash ISAs don't just sit there. The capital is used for mortgage lending, etc. ISA reform is not the silver bullet to UK capital market woes. Truly diverse thinking that includes retail representation across all age groups and walks of life, proactive retail shareholder engagement by companies and universal financial education are keys to the re-energising the UK.
There is no silver bullet for fixing the UK’s capital market woes. Truly diverse thinking that includes retail representation across all age groups and walks of life, proactive retail shareholder engagement by companies and universal financial education are keys to the re-energising the UK. All hands on the pump needed!
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