The industry reaction to Junior ISAs has been mixed, with some hailing them a sensible means of saving and others lambasting them as a crude money-saving initiative.
Transact's Malcolm Murray gives his thumbs-up to the junior versions of the tax-free savings accounts, as unveiled by the government yesterday.
He thinks the new ISAs - an attempt to fill the void created by the abolition of child trust funds - will encourage a culture of saving amongst the young and expects all platforms to offer the new tax wrappers.
"I think it is a great idea - anything that encourages a sense of saving has to be applauded and this is precisely what is needed to encourage long term saving."
He thinks Junior ISAs will appeal to grandparents especially, who will be encouraged to make contributions as they have a £3,000 annual allowance under inheritance tax rules.
"Junior ISAs present the obvious way for grandparents to put money aside each year," he says.
Unlike CTFs, the government will not make contributions to Junior ISAs but Murray says comparisons between the wrappers are redundant.
"The Government scrapped CTFs to save money and it would make no sense to then make contributions to Junior ISAs."
Fidelity has also given its backing to Junior ISAs, with UK managing director Gary Shaughnessy hailing them a "really positive move".
"This endorses the idea of saving, particularly regular saving, from as early an age as possible," he says. "ISAs are well understood and liked by savers - they work so it makes sense to build on them.
"Increasingly, we are seeing responsibility moving from the state and employers to individuals when it comes to saving, so a move towards whole-of-life saving, connecting Children's ISAs, ISAs and eventually pensions must be our aim."
Andrew Merricks of Skerritt Consultants says Junior ISAs are in principle a positive move but the details need to be carefully thought through to ensure they are effective. He says they are a better option than old baby bonds or investing via endowments - the historical way of saving for children.
"If the junior ISA offers wider investment powers and matches what you are allowed to put into ISAs and can be used a bolt on to an adult one - anything that encourages people to put money away for youngsters at a later age is a good thing," he says.
He adds the fact they cannot be accessed until 18 is positive as it will prevent parents dipping into the scheme.
However, other industry figures are more skeptical and think Junior ISAs amount to a crude cost-cutting move by a government which has just unleashed a series of stringent cuts in its recent Spending Review.
Jason Witcombe of Evolve Financial Planning says: "To me, it looks like it is just a CTF without contributions, so quite why it has got to be called a Junior ISA and providers arer forced to change all their literature seems a little bit silly," he says.
Commenting on IFAonline, Geoff Clarke says: "So the government won't pay but want to leave the route for parents and grandparents to do so?
"Why not leave CTFs as they are (change the name if you have to) without the government contribution? Time and money saved. Given that many parents did not even invest the CTF voucher, how many Junior ISAs are going to fly off the shelves in the present economic climate?"
Nick McBreen, of Worldwide Financial Planning, questions whether the government's primary motivation is to encourage savings amongst the young or save money.
"Is this going to be serious or is this going to be tuppence ha'penny like CTFs which really did make no difference to anybody. The take-up was appalling because people didn't really understand and didn't know what to do with them," he says.
"So, this needs to be handled much better in terms of realistic limits. It is referring to limits similar to those of the adult ISAs but we don't know yet what these will be."
McBreen also thinks a question mark hangs over who will provide Junior ISAs.
"Which private providers are going to play in this field - because we saw with CTFs, very few people actually wanted to know because there was no money to be made in the marketplace," he adds.
James Budden, marketing director Wealth Management at Baillie Gifford, adds: "It appears the government has taken pity on those organisations whose business model depended on the CTF. As reported this proposal does not seem to offer much more to investors than is already available through investment trust saving schemes. Bare trusts and use of personal allowances currently mitigate most if not all tax liability within investment trust schemes.
"No doubt the children's ISA will come with limits on contributions which you would not find attached to other products and I guess they will be lower than the real thing. Again people can already use the ordinary ISA route to save for children. The key to the CTF was the government contribution, and with that removed I fear this is an olive branch to appease the lobbyists."
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