FT: Building Societies vs. MMFs in UK
The Financial Times writes, "Investment platforms and building societies clash over new Isa rules." Subtitled, "Dispute over whether 'cash-like' money market funds should be allowed in stocks-and-shares Isas," the article tells us, "Investment sites and building societies are clashing over whether money market funds should be allowed to be held within stocks-and-shares individual savings accounts (Isas) when new rules come into force next year. The government overhauled the UK's Isa regime in the Budget in November by reducing the annual amount that can be put into cash Isas to £12,000, from £20,000, for savers under 65 from April 2027." It says, "To stop individuals avoiding the new limit by holding cash in stocks-and-shares Isas, HMRC will introduce certain rules. These will include a test to see if an investment is too 'cash-like' to be eligible for a stocks-and-shares Isa. But the two arms of the financial services industry are at loggerheads over whether money market funds, which invest in short-term bonds and serve as an alternative to cash but with slightly higher returns, should be eligible." The FT piece adds, "At a recent meeting with the Treasury, investment sites argued money market funds should be permitted, since they provide many savers with their first experience of investing, according to three people with knowledge of the meeting. However, representatives of building societies supported the exclusion of money market funds, as these attract money that might otherwise be held in the cash deposits used by lenders to fund mortgages. The debate is heating up as the government consults with the industry on draft legislation, due to be laid before Parliament before April 2027."
