The Treasury's proposed overhaul of Individual Savings Accounts (ISAs) has ignited significant controversy within Britain's financial sector, with industry leaders warning that Chancellor Rachel Reeves' reforms could do more harm than good to the nation's savings culture.
A System That Wasn't Broken
If the old adage "if it ain't broke, don't fix it" applies anywhere, it should certainly apply to Britain's ISA framework - one of the most successful investment innovations of the past three decades. Unfortunately, under Rachel Reeves' leadership, what should have been careful evolution has turned into what industry insiders describe as a confusing patchwork of schemes that threatens to undermine the very purpose of tax-free savings.
Industry Anger Boils Over
By City standards, a recent meeting involving investment platforms, asset managers, trade bodies and officials from both the Treasury and HM Revenue & Customs became what participants described as a "cauldron of discontent." The remarkable achievement of Reeves' officials appears to be devising an overhaul that satisfies almost nobody within the savings industry.
A series of ISA policy u-turns ahead of November's Budget have proven completely ineffective, leaving the industry to clean up what one savings industry source called "the Treasury's mess." The source elaborated: "The whole policy is backward, but what we're being told is that the chancellor has decided this is a good idea and so everyone has to backfill rules and regulations to make it happen."
Multiple Problems With Proposed Changes
The reforms face criticism on several fronts. Proposals to tax cash balances held within stocks and shares ISAs risk fundamentally undermining the perception of ISAs as genuinely tax-free products. Furthermore, the preference of cash ISA savers to avoid investing in listed equities is unlikely to change, potentially leading to an overall reduction in national savings levels.
Perhaps most concerning is the age restriction on cash savers, which will disproportionately affect those looking to derisk their finances before reaching 65. This could leave many approaching retirement with fewer options to protect their savings.
Scathing Industry Response
Michael Summersgill, chief executive of investment platform AJ Bell, delivered an especially scathing assessment in a letter to Reeves last week. While the chancellor should be left in no doubt about the industry's determination to continue fighting these reforms, the letter also suggested confidence that she will eventually buckle under mounting pressure.
Given recent evidence of Treasury missteps, including the problematic impact of business rates reforms on Britain's hospitality industry, industry leaders feel justified in their conviction that these ISA changes represent another anti-growth tax cock-up in the making.
Rolls-Royce Executive Pay Package
In separate corporate news, Rolls-Royce Holdings appears poised to achieve what many would consider an engineering feat in executive compensation: increasing chief executive Tufan Erginbilgic's maximum potential pay package by two-thirds without sparking significant shareholder protest.
The aerospace giant has been consulting leading shareholders about a new three-year pay policy that would see Erginbilgic's maximum annual award rise to more than £13.5 million. This increase comes through a 50 percent rise in his annual bonus entitlement and a doubling of his long-term share award from 375 percent to 750 percent of salary.
Justification for Increased Compensation
While the percentage increase appears steep, investors argue the compensation reflects extraordinary performance. When Erginbilgic replaced Warren East after the pandemic, Rolls-Royce was barely recovering from its knees. Today, the company stands firmly entrenched among Britain's ten largest public companies.
"Tufan has created close to £100 billion in shareholder value. It is now a fundamentally different company," said one top-twenty investor. "He has restored competitiveness, credibility and engineered a business school case study. He is grossly underpaid for the value he has delivered for shareholders."
Other fund managers echo this sentiment about "Turbo Tufan," suggesting that Rolls-Royce's upcoming annual meeting should be closely watched. If Erginbilgic's future pay package receives anything less than overwhelming approval, investors concerned about Britain's most prestigious manufacturing name might need to reconsider their positions.
Merger Probe Overhaul Faces Scrutiny
Meanwhile, ministers' plans to reform how the Competition and Markets Authority (CMA) scrutinises corporate mergers have themselves come under inquiry. Some competition lawyers have described the proposed changes as "the biggest shake-up since 1948."
A 39-page document published by the Department for Business and Trade launched a consultation that government officials claim will fuel economic growth, but which has left some anti-trust experts aghast at the potential implications.
Contradictory Elements in Proposed Reforms
The reforms contain seemingly contradictory elements, including creating CMA board sub-committees to examine deals and wider markets while simultaneously insisting that independence from government will be strengthened. This creates what some observers describe as a degree of schizophrenia in the proposals, particularly given that the CMA chair, chief executive and other board members are appointed directly by ministers.
Recent trends show the CMA did not block a single merger last year - the first time since 2017 that the watchdog gave every deal a clean bill of health. However, this pattern didn't extend far into 2026, with the CMA recently ordering Aramark to sell Entier after concluding their combination risked harming choice in offshore catering services for oil rig workers.
Ironically, Aramark's corporate law firm on that deal was Simpson Thacher & Bartlett - the same firm whose research for the Financial Times had highlighted the CMA's recent leniency toward mergers. This coincidence underscores the complex, interconnected nature of Britain's corporate regulatory landscape as it faces potential transformation.
