Scottish Friendly has urged the Government to go further in its efforts to turn the UK into a “nation of investors”, ahead of Chancellor Rachel Reeves’ Mansion House speech this evening.
While ministers have explored a range of measures aimed at encouraging savers to invest – reportedly including potential cuts to the annual Cash ISA allowance – the mutual insurer argues that more fundamental action is needed to shift public attitudes towards investing.
According to Scottish Friendly, tackling the psychological barriers that deter people from entering the stock market will be key. Its research highlights widespread anxiety among the public, with 26% of British adults saying they feel “nervous” about investing, 16% “overwhelmed” and 10% going as far as to describe themselves as “terrified”.
Among those who do not currently invest, fear of losing money remains the most significant deterrent (34%). This is followed by concerns about making the wrong decisions (26%), not having enough money to invest (24%) and worries about market volatility (20%).
In response, Scottish Friendly is calling on the Government to adopt a broader, more proactive strategy. This includes supporting campaigns such as its “Savvy Squirrel” initiative, designed to improve financial confidence and encourage more people to engage with investing.
The mutual is also urging ministers to act on recommendations from the Risk Warning Review, including softening disclosure requirements that compel firms to heavily emphasise potential losses. It argues that current messaging can discourage would-be investors before they even begin.
Further proposals include commissioning a review into how the tax system could better incentivise stock market participation – particularly in UK-listed companies – and simplifying the ISA regime to make it more accessible.
Stephen McGee, Chief Executive of Scottish Friendly, said the Government’s ambition was welcome but warned that meaningful change would require a more comprehensive approach.
“The Government is right to aspire for the UK to become a nation of investors, but achieving that will take a multi-pronged approach that gets to the root of savers’ fears,” he said. “People avoid the stock market because they don’t understand ISAs, they’re scared of losing money and there’s little support to help them understand and manage that risk.
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“We also need a regulatory regime that encourages investing rather than discourages it. Potential investors are constantly bombarded with warnings that they could lose money, which doesn’t help. It’s a bit like a car salesman warning you the car might break down before you’ve even bought it. It’s little wonder people walk away.
“If the Government is serious about turning us into a nation of investors, it needs to go a lot further. That means tackling fear head-on through campaigns like Savvy Squirrel, easing disclosure rules and using the tax system properly to encourage long-term investment in UK companies. Bold rhetoric is easy. Bold policy is harder – and that’s what’s needed here.”
