End of year reports for the three big themes of 2023

The Christmas tree is up. The fairy lights are twinkling. And despite the tome that is the Finance Bill falling into our laps at the end of November, I can feel the world of work moving down a gear.

Now is traditionally the time to look back over the previous year. With this in mind, I have written the end-of-year report for the three big pensions and savings themes that have dominated my working day.

The scrapping of the lifetime allowance

This was one of the biggest developments of the year, and a welcome one at that. We all speculated he might increase it, but at the Spring Budget the Chancellor chose to abolish the lifetime allowance altogether. The news was met with an accumulative sigh of relief from advisers and clients all struggling with age 75 tests and debates of whether to crystallise or not.

But we are not yet out of the woods on difficult pensions tax questions. The lifetime allowance has been replaced by three new allowances. And although there’s no doubt the new rules are less penal, there is still complexity, especially for those with large pension wealth who have started to take their benefits.

Verdict: delivered real change but more to do.

The advice-guidance boundary review

It’s generally accepted more people need more help making decisions about their savings. When wrestling with how to close this ‘help gap’, it feels like this year the FCA has been on a journey of discovery.

We started the year with its consultation on introducing simplified advice on investment ISAs which failed to tackle the major problems. In the light of industry feedback, FCA accepted it had to think bigger, and together with the Treasury announced a much wider review.

In December, they published their policy paper. The new ‘targeted support’ proposals could be a gamechanger in allowing firms to give people much more help to make informed financial decisions. But it still feels like the proposals for simplified advice have not been completely thought through.

Whatever the outcome of these proposals, regulated financial advice remains the gold standard.

Verdict: set solid foundation to build on next year.

ISA reform

In theory, ISAs should be a simple tax-efficient savings product. But through successive governments’ tinkering there are now six different ISA types, all aiming to cater for slightly different customer needs.

We need to cut off some of the heads of this burgeoning hydra monster, and simplify ISAs to create a single ISA solution – One ISA.

The Treasury though didn’t feel that brave. At the Autumn Statement it announced a package of measures that will all go some way to making ISAs work slightly better, but it stopped there.

I am never going to quibble with making consumers’ saving lives easier, but I wish the Treasury had been more ambitious and set the agenda for true ISA reform rather than settling for what it could achieve in the time left to this government.

Verdict: could try harder.

That was 2023. Now we need to see if governments and regulators can get an A* on their report for next year.