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FCA U-turns on fixed-term deposit Isa proposals

The FCA has U-turned on proposals to allow unbreakable fixed-term deposits to be included within an Isa.

In an update published in June, the regulator said unbreakable term deposits of more than 30 days would not be allowed in an Isa wrapper.

However, a consultation published days later proposed a carve-out “given that consumers may wish to hold money in unbreakable term deposits within their Isa wrapper”.

Sources suggested the inclusion of the carve-out was expected to be a formality.

But the final policy statement from the FCA, published last week, dismissed the proposed carve-out, leaving platforms in limbo.

The statement says some in the industry queried why Isa managers should be treated differently under the client money rules from other investment firms.

An Ascentric spokesman says: “In the short-term we will only be placing FTDs with deposit-takers who will sign the FCA’s proforma trust acknowledgement letter. We will be looking into the question as to whether FTDs should, or should not, be administered in a CASS environment over the coming weeks.”

James Hay says it had planned to offer FTDs from five banks.

The firm says: “Regrettably, following the revised regulations and the short notice of the proposed changes we have had to temporarily remove the cash panel options for the Isa and general investment account products.

“Sipps are unaffected and the cash panel will continue to operate as usual for Sipp clients.”

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  1. Incompetent Regulators 14th July 2014 at 11:00 am

    Regulator interfering with product design!

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