The majority of financial advisers would be in favour of simplifying the ISA market, new research from AJ Bell has indicated.

According to the investment platform’s latest findings, more than four in five advisers (84%) would back the concept of having one ISA product that covers all the existing benefits of ISAs.

There are four main types of ISA – which are the cash ISA, stocks and shares ISA, innovative finance ISA and lifetime ISA – and the maximum amount that an individual can save into an ISA over the duration of the tax year is set by the Government at £20,000.

However, AJ Bell’s research, which was based on an August survey with 349 financial advisers, found that 65% of advisers believe unnecessary complexity has crept into the ISA market.

More than three quarters of respondents (77%) believed this was down to “too many variants and names” for ISA products, which was in line with consumer research carried out by AJ Bell earlier this year that showed only half of people can identify the main types of ISA.

The lifetime ISA rules and restrictions to the number of ISA types that an individual can hold per year were also flagged by advisers.

“ISAs remain the ideal tax efficient savings vehicle to complement pensions, but there is a real danger creeping complexity will leave new investors completely bamboozled,” said head of retirement policy at AJ Bell, Tom Selby.

“This has been borne out by our consumer research, which shows half of Brits agree the different versions of ISAs make them too complicated and that a single product would make them easier to understand.”

In April this year, AJ Bell launched a policy paper that called for all existing types of ISA to be consolidated into a single “One ISA” product.

In proposals presented to the Chancellor, Jeremy Hunt, the investment platform outlined a system that would see all existing ISAs consolidated into a single product, helping make it easier for people to save and invest while giving policymakers the flexibility to incentivise a wider range of savings goals.

Selby added: “Unnecessary complexity is the enemy of engagement and good consumer outcomes. In the ISA market, the mind-bending array of options risks putting people off altogether, potentially dampening the impact of wider efforts from the FCA to get more people investing for the long-term.

“As the Government and regulator ramp up efforts to boost advice and guidance, it is vital the products people engage with are as easy to understand as possible. ISA simplification could be a game changer in this regard, making life easier for millions of investors and would-be investors.”

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