The Treasury Committee has called for the government to abolish the lifetime ISA, commonly known as the LISA. This comes just 16 months after it was first made available after it receiving consistently negative feedback on the product.
In its latest report, the Treasury Committee says:
"This inquiry has received strong criticism of the LISA over it's complexity, it's perverse incentives, it's lack of complementarity with the pensions saving landscape and it's apparent lack of popularity with the industry and pension savers. The government should abolish it."
It concluded: "There is little evidence that tax-relief is an effective way to stimulate household saving…there is, however, more evidence that cash bonuses and direct matching can stimulate saving and have the potential to help people build a precautionary savings buffer."
Former pensions minister Baroness Ros Altmann was a witness to the inquiry. She said: "I would urge the Committee to recommend abolishing the LISA; just scrap it. It is, in my view - and I have seen this for so many decades - another mis-selling scandal waiting to happen."
In response to the Treasury Committee report, a Treasury spokesperson said:
"People deserve choice and freedom in how they save, and the lifetime ISA does just that. It is an effective way to help people get on the housing ladder or save towards their retirement. For every £100 saved, we give a generous £25 bonus, and so far, around £130 million worth of bonuses have been paid to 170,000 investors."