The Financial Conduct Authority (FCA) has outlined its proposed approach to regulating the promotion and distribution of the Lifetime ISA (LISA).
The introduction of the LISA was announced in the 2016 Budget and the government intends for it to be available from April 2017. The LISA is designed to allow people under the age of 40 to save or invest flexibly to either provide a deposit for a first home or save for retirement.
The FCA is proposing to regulate the LISA in the same way as other ISA products, with some additional protections designed to reflect the dual purpose of a LISA and the restrictions on accessing funds.
The full consultation paper can be seen here.
The regulator says the LISA will play a role in helping individuals save for either their first home or retirement. However, like any other product there can be risks to consumers. These new rules will help to make sure that consumers are protected, the FCA said.
Firms will be required to give specific risk warnings at the point of sale which include reminding consumers of the importance of ensuring an appropriate mix of assets is held in the LISA. Firms will also have to remind consumers of the early withdrawal charge and any other charges.
The FCA has proposed that providers will have to offer a 30 day cancellation period after selling the LISA.