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Big Society Isas could be high risk

Advisers have warned that Government plans for Big Society Isas appear to be a high-risk investment strategy that is unlikely to be suitable for retail clients.

The social Isas are part of a wider strategy under the Big Society Bank which aims to develop the social investment market to give charities and social enterprises access to new funding.

Launching the strategy this week, cabinet minister Francis Maude said: “We want to make sure there are good opportunities for everyday savers to take part in social investment.

“It is unthinkable for businesses to grow and thrive without capital finance but this has too often been the reality for charities and social enterprises.”
Hargreaves Lansdown head of research Mark Dampier says: “It is typically fluffy. I am not quite sure what a community project is but they are likely to be small, illiquid, riskier and not on the stock exchange. How can advisers sell that to investors?”

Skerritt Consultants head of investments Andrew Merricks says: “With the near paranoia surrounding correct risk assessment of clients and what they invest in, to tie community projects in with people’s long-term savings does seem difficult.”

The Big Society Bank will be funded by £400m from dormant bank accounts as well as an additional £200m from the UK’s biggest banks, ann-ounced last week as part of Project Merlin.

The BSB will also look at social pension funds and a social stock exchange which will allow people to buy stakes in projects bidding for contracts to provide public services.

Details are still being negotiated and will be finalised later this year but the bank will be able to use its balance sheet to co-invest, underwrite or guarantee investments.

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Isnt this the service that building societies provided before they were lumberd with the costs of bailing out banks?

  2. If it sounds like madness, and it looks like madness, then it will almost certainly prove to be madness. I suspect that it will be as successful as Stakeholder pensions !

    In any case, who gives to charities these days? No-one with any understanding of the real world should. 50% of charity funding comes from government, in other words every tax payer has a wedge stopped from his earnings to support the 30,000 charities in this country. This means that the government calls the shots and uses the donations collected from all the well-meaning, but naive people who give to charity to pay for services that the government should already be providing. In other words, donations to charities (when spent at home) are simply a voluntary tax on people who feel guilty about being better off than some of their fellow human beings.

    The big charities that we all know and love (ha ha) are headed by fat cats who are paid ridiculously high salaries, gold-plated pensions and massive perks and many other employees are very well paid for the non-jobs they do. Take barnardo’s – they keep children in care to ensure that their own jobs remain safe. Without Barnardo’s, thousands of children could grow up in a warm, safe, loving family environment rather than an institution. That’s charity ?

    Granny Smith stays out in the cold rattling her tin in the mistaken belief that most of the pennies that she collects finishes up with the needy, sick or orphaned, rather than buying champagne for fat cats or a new limousine for a murdering dictator in darkest Africa.

    Get real – stop giving and let these charities go to the wall. Most will not be missed even by the people who they profess to support.

    Other countries survive well-enough without over-blown, government-driven charities – why can’t we ?

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