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Roundup and Commentary: Lifetime ISA Revisions

OAC Digest: Special Editions
FCA, Investments, OAC Digest

27 March 2017

The Financial Conduct Authority has published FCA Policy Statement PS17/4: “Handbook changes to reflect the introduction of the Lifetime ISA: Feedback on CP16/32 and final rules”

The FCA has, in broad terms, confirmed that the general framework for regulating the promotion and distribution of the LISA as set out in CP16/32 should be adopted. However, a number of respondents to the consultation raised two additional specific risks that they felt should be included as part of the generalised risk warnings.

Firstly, the risk that investors may lose out on employer’s pension contributions where they have a personal pension and there is an employer matching contribution structure in place.

Secondly, the risk that investors may not consider the impact of taking out a Lifetime ISA on means-tested state benefits as opposed to saving in a pension.

In addition, FCA has now noted one change to the operation of the LISA that was announced after it published CP16/32. For administrative reasons, in the first year following the LISA’s launch, the government bonus will be paid at the end of the year. In subsequent years it will be paid monthly in arrears. The government recognised that this meant investors could face the early withdrawal charge up to 12 months before they received the bonus, and on 13 December 2016 the Financial Secretary to the Treasury announced that it would be waived for 2017/2018.

OAC has experience in helping firms develop their LISA products (ranging from general product design and construction to drafting Key Features Documents). In reviewing KFDs we were able to ensure that all appropriate risk warnings necessary were shown, as well as ensuring that the actual structure and content of the KFD was compliant. If you would like any assistance in this area, please get in contact.

Jackie Wright

For more information
Jackie Wright
Senior Regulatory Compliance Consultant

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