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BSA urges Govt to hep savers

BSA urges Govt to hep savers

Category: Savings

Updated: 22/11/2013
First Published: 22/11/2013

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The chairman of the Building Societies Association (BSA) is urging Government to do what it can to help savers who've seen rates plummet in the last year since the launch of the Funding for Lending Scheme (FLS).

David Cutter said that FLS has had a "profound effect" on the markets in which building societies and other mutuals operate.

FLS was launched in July last year with the aim of boosting lending to consumers and small businesses by giving participating lenders access to cheaper funding.

However, Cutter said that whilst the scheme had clearly helped in providing more credit, it had also had a knock-on impact on the returns for savers.

The BSA is therefore proposing a number of measures, which it has included in its submission to the Treasury ahead of the Autumn Statement on 5 December, aimed at helping savers who are "caught in the current low-rate environment".

These include increasing the annual cash ISA allowance to match that of stocks & shares ISAs, which will mean that savers will be able to deposit up to £11,520 into a cash ISA. Currently only half of this is allowed to be invested in a cash version, while the full allowance can be invested in a stocks & shares ISA

The BSA also said Government should change the rules so that savers are allowed to transfer funds held in a stocks & shares ISA into a cash ISA.

For children's savings accounts, the BSA is calling for Government to permit savings held in a Child Trust Fund to be transferred into a Junior ISA.

It is also proposing the creation of what it calls a First ISA Scheme, whereby Government would in some way match the amount that savers deposit into their cash ISA during the first year that the account is open in order to encourage more people to save.

Commenting, Cutter said: "Savers remain the bedrock on which our lending industry is based, and it is therefore vital to encourage and foster a long-term savings culture."

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