AJ Bell has called on the government to allow adviser charging on the Lifetime Isa, a move the firm claims would encourage more uptake through advice channels.
The call comes just days before the Lifetime Isa, or Lisa, regime goes live, and a month before AJ Bell itself intends to launch its own stocks and shares Lisa.
HM Treasury confirmed that the funds in a Lifetime Isa could not be used to pay for advice without incurring the 25 per cent penalty, but did not comment on whether there was potential for this to change.
The Lisa will allow people under 40 to start saving up to £4,000 a year, plus a 25 per cent bonus, towards either a first home or their retirement.
Under current rules, adviser charging - the practice of withdrawing money from a tax wrapper to pay for advice - is permitted on traditional Isas and pensions.
However, AJ Bell pointed out that the rules for the Lisa make no provisions for adviser charging.
That means money withdrawn from a Lisa to pay an adviser could incur a 25 per cent penalty charge.
"It makes no sense for adviser charging to be prohibited for Lisas when it is allowed for Isas and pensions," Mike Morrison, head of platform technical at AJ Bell, said.
"We know that the Treasury wants the Lisa to be a success, so it is strange that it is not prepared to make a simple change that could help that. The government should be encouraging people to take advice about their savings, not putting barriers in the way."
Earlier this year, AJ Bell surveyed 232 financial advisers to ascertain their views on the Lisa.
The vast majority believed the product would be of little or no interest to their clients, with 70 per cent saying just one in ten clients would be interested in the product.
However, a second survey revealed 45 per cent of advisers believed allowing adviser charging would make the Lisa more attractive to their clients.
Mr Morrison said, while adviser charging may not be needed in the early days of the Lisa, when pots sizes are small, it could become useful as the market matures.
"We risk ending up in a situation where clients have £50,000 or £100,000 invested in a Lisa but are not able to pay for advice via that product. Worse still we may have people who miss out on the opportunity to build such a pot because of this barrier to advice," he said.
AJ Bell confirmed it planned to launch its own Lisa at the end of April. The AJ Bell Lisa will have the same investment options and charging structures as the firm's regular Isa products, a spokesperson said.
The Lisa will be available through both advised and direct channels.
AJ Bell joins a handful of providers who have confirmed they will offer stocks and shares Lisas, including The Share Centre, Hargreaves Lansdown, One Family and Scottish Friendly.
As yet the only bank or building society to confirm it will offer a cash Lisa is Skipton.
james.fernyhough@ft.com
