The Treasury has announced plans to change the rules over the ISA allowance to allow savers hit by the collapse of a bank or investment provider to reinvest the assets.
Under the old rules, any investment or cash lost due to the collapse of a provider or bank would fall under the £10,680 annual allowance.
But according to the BBC, financial secretary to the Treasury Mark Hoban(pictured) has issued a statement to MPs outlining plans to allow savers to invest an equivalent amount without affecting their ISA allowance.
The plan formalises arrangements that were put in place in the wake of the collapse of Icelandic bank Icesave and life settlement-backed investment provider Keydata. Hoban said: '[The changes] will enable investors whose ISAs are affected by the failure or default of a financial firm to continue to benefit from tax-advantaged savings.'
'They also demonstrate the government's commitment to ensure that theISA remains a secure, accessible and tax-advantages saving product.'
[source: www.citywire.co.uk, 6 December 2011]
'Interesting and an eminently sensible idea, but one would hope the FSA will start picking up the potential failures before they happen'
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