Retail investors are "overwhelmingly opposed" to scrapping or restricting access to cash ISAs, adding that they are doubtful that changes would boost stock market investing, Rathbones Group has found.

The wealth management firm’s latest study revealed that 61% of retail investors do not want to see changes to ISA rules that would scrap or restrict the annual allowance to cash ISAs.

Eleven per cent said they were in favour, while 27% did not express an opinion.

Currently, adults can contribute up to £20,000 a year tax-free into ISAs and deposit all of the money into cash ISAs, avoiding stocks and shares ISAs.

However, documents from the Spring Statement said that the Government is "looking at options for reforms" to ISAs to "get that balance right between cash and equities".

Rathbones’ research found that 19% of retail investors would invest more in the stock market if there were changes to cash ISA rules, with 4% stating they would invest substantially more.

Around 17% of those questioned said changes to ISA rules would have no impact on their investment in the stock market, while 9% would reduce the amount they invest in the stock market.

Chartered senior financial planner at Rathbones, Faye Church, said: "It’s not necessary to cut tax-free saving allowances to boost stock market investment. Those who are using cash ISAs are generally not choosing cash as an investment but as a stepping stone for something else.

"Cash ISAs can be used to hold monies that may be needed in the shorter term while also benefitting from tax-efficient interest - we find they are often popular with younger and mid-life clients looking to buy or move house, for instance.

"It’s not a sensible option to invest short-term monies in the stock market due to market volatility; there is no guarantee that your initial capital will retain its value. If cash ISAs are being used as a more long-term solution, investors could see much stronger returns in the stock market compared with cash savings, but many may need support from wealth advisers before making the decision to switch."

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