Experts suggest that the complexity of the Lifetime ISA (LISA) and the duality of its purpose (saving for a first home deposit or longer-term for retirement) requires that the product must bring with it clear consumer disclosures, communication and risk warnings if the industry is to avoid a potential influx of mis-selling claims further down the line.

ISA managers looking to promote and distribute this product must ensure that they highlight the risk factors to retail investors to avoid clients subsequently alleging mis-selling following poor consumer outcomes or reduced retirement saving.

Among the potential pitfalls are:

  • The consumer ending up with less than their original investment if they withdraw early;
  • The lack of investment returns on cash LISAs and a failure to beat inflation;
  • Potential loss of employer contributions to workplace pensions;
  • Savings or investment choices that are not in line with long-term needs.

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Financial Mis-Selling Quarterly News March 2017

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