The proposal to simplify the UK’s ISA regime by amalgamating cash ISAs and stocks and shares ISAs has been supported in a report by the Centre of Policy Studies (CPS).

The report by the independent think-tank, ‘Retail Therapy: Making the case for share ownership’, has been written by CPS research fellow and former Government adviser, Nick King, and is endorsed by City minister Andrew Griffith MP.

It supports the idea of combining these types of ISAs and ‘Retail Therapy’ makes a number of recommendations to ensure that the proposal is sustainable, which includes urging the Government to create a ‘Retail Investment Strategy’ focused on encouraging more people to invest for the long-term.

The report states that there are currently nearly 10 million people with investable assets of more than £10,000 held in cash, of whom more than four million want to take at least some form of investment risk. However, it says that currently, “buying shares is treated by regulators as a more dangerous pursuit than gambling.”

Stating that successive governments have not done enough to address this, the ‘Retail Therapy’ report calls for a public awareness campaign, similar to the ‘Tell Sid’ campaign in the 1980s, which is supported by the Government, regulators, and the London Stock Exchange.

The report also wants to ensure that the odds are not unfairly stacked against retail investors, with a proportion of new equity offered through IPOs always being available to retail investors. It also calls for a rethink of disclaimers around retail investing to take a more realistic, positive attitude towards risk, with personal responsibility in investing embraced.

King said: "It is received wisdom that owning your own home is a good thing – it gives you a stake in society and is in many ways the foundation of the UK’s property-owning democracy. Sadly the same cannot be said for share ownership.

"Whether they are put off by high regulatory barriers, a lack of access to advice or a greater understanding of the opportunities which exist, the British public is missing out on the rewards that can come with individual investing. If our recommendations are taken on board, the UK can unlock billions in new investment – supporting a dynamic economy which will create the jobs, opportunities, and wealth of the future."

Investment platform, AJ Bell, called for radical simplification of the UK savings system earlier this year, proposing a consolidation of all existing ISA variations into one solution, making it easier for people to invest.

AJ Bell’s head of retirement policy, Tom Selby, said: “AJ Bell has long argued creeping complexity in the UK’s ISA regime risks putting people off using the product, alongside their pension, to save for the future. We now have six different types of ISA, with new versions added incrementally over the years with different aims and different rules.

“Any new investor engaging with ISAs for the first time would be forgiven for seeing this complexity, throwing their hands up in disbelief, and simply giving up before they’ve even started.

“Combining the best of the existing ISA regime in a single ‘One ISA’ product would make life much simpler, particularly for those who are less confident about their finances.

“The FCA and Treasury are rightly reviewing the advice/guidance boundary, with the aim of improving engagement and ultimately encouraging more people to invest for the long-term, in line with their goals and appetite for risk. This should hopefully result in reforms that both improve the guidance savers receive and increase the number of people who take regulated financial advice.

“With increasing financial engagement now a clear policy goal, it is absolutely critical we make sure the products we want people to engage with are as easy to understand as possible.”

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