"The government is holding customers back from making the most of the greater benefits and flexibility available on the new product."
OneFamily is urging the government to remove the £4,000 transfer limit for customers who want to replace their Help to Buy ISA with a Lifetime ISA.
The Government has confirmed it will go ahead with plans to stop accepting new applications for the Help to Buy ISA from the 30th of November.
The Help to Buy ISA launched in December 2015 and if customers have saved the full amount, they would now have £9,400 in their account, plus interest. However, the government will only allow customers to transfer £4,000 per year into the Lifetime ISA.
OneFamily research found that 34% of existing Help to Buy ISA customers would move their savings into the Lifetime ISA if they could transfer the full amount.
Nici Audhlam-Gardiner, managing director of OneFamily’s Lifetime ISA, commented: “By not allowing Help to Buy ISA customers to transfer their full savings into the Lifetime ISA, the government is holding customers back from making the most of the greater benefits and flexibility available on the new product.
“With the transfer cap at £4,000, savers who have the maximum invested could move gradually over a three-year period, however 29% of Help to Buy ISA customers also said they don’t want to have to manage two accounts simultaneously.
“The Help to Buy ISA was always designed to be a short-term product, whereas the Lifetime ISA means young people are not only saving towards that all important first home purchase but can keep the account open and give their retirement savings a much-needed boost too. Additionally, the Lifetime ISA can be used, its entirety, for a first-time home deposit, whereas the Help to Buy ISA bonus can only be claimed on completion of a first home purchase.”