BSA calls for further reform of Isas

Following economic secretary Ed Balls’ announcement regarding the usage of Isas in the UK, the Building Societies Association (BSA) has said that further reform is needed.

Mr Balls said that transfers between cash Isas and stocks and shares Isas will be allowed in the future, but only in one direction, from cash to stocks and shares.

However, the BSA has urged the government to allow transfers to be made in the other direction also, as this would create a "consistency of approach" and also make "lifestyling" of investment portfolios easier.

Adrian Coles, director general of the BSA, said: "Anyone shifting their cash Isa into equities must be made aware that they cannot reverse the decision. Making transfers one-way-only, as the minister proposes, means that errors of judgement or bad advice could never be rectified, while still retaining the Isa tax exemptions.

"Allowing transfers from stocks and shares Isas to cash Isas would allow savers to diversify their assets and benefit from the lower volatility offered by cash holdings."

Mr Coles points out that lifestyling is the process of increasing the balance of cash in a portfolio to better match an individual’s assets and liabilities.

According to the BSA, this would be made easier if transfers were permitted from stocks and shares Isas to cash holdings.