The draft regulations for ISAs were originally expected last month, but the Inland Revenue is now looking to publish them in mid-May. There will be a consultation period of just six weeks, during which firms planning to offer ISAs will be able to give their opinions. But the final legislation has to be ready in July to get it passed before the recess.
Alasdair Buchanan, marketing consultant at Scottish Life, says: "We haven't seen anything yet. They are really rushing things and there is a general concern: how can we get everything up and running? We will have less than nine months to develop new products and computer systems and test them. That goes for both ends - the ISA providers and the Revenue."
The biggest computer problem is that ISAs can be made up of three components - a cash deposit account, a life fund, and equity investments to replace PEPs. Firms planning to offer these "maxi-ISAs", which will allow savers to combine all three elements, face problems in linking three different computer systems. That comes on top of their efforts to get round the millennium bug problem.
There may also be legal hitches: life companies cannot sell PEPs, and a unit trust firm cannot offer life policies. Many firms will have to set up subsidiaries to be able to offer the full ISA range, or they may team up with other businesses to run joint ISAs. It will be a costly and time-consuming process.
Adrian Boulding at Legal & General says the firm has a large dedicated IT team and expects to be ready to offer ISAs from day one. Other firms may not be so organised, though he is sure the Inland Revenue will be ready for ISAs. The Revenue itself is keeping quiet. A spokeswoman says: "We are developing as we go along to deal with ISAs."
The ISA problem may be solved in the short term through intense political pressure to get the systems up and running in time for next April. But there is a much bigger headache looming in the shape of the plans for stakeholder pensions. These will provide a "safety net" on top of the state pension and as an alternative to the State Earnings-Related Pension Scheme, but there is no timetable for their introduction. The Association of British Insurers (ABI) has already expressed concern that "the consultation document on ISAs seems to have been written entirely separately from the one on stakeholder pensions ... If these developments and initiatives could be brought together, it would be easier to develop a long-term strategy," it commented in its response to the pension proposals.
It would be far-sighted to develop a joint policy on all these reforms. But at the moment financial firms (and the Inland Revenue) must be terrified that any move in this direction might turn into an IT nightmare.Reuse content