Many UK investors hold significant cash inside a Stocks and Shares ISA, either between trades or as a deliberate tactical position. The FCA has scrutinised how platforms treat that cash - and reforms remain live.

Key takeaways

  • The Stocks and Shares ISA allows uninvested cash, often paying interest.
  • Platforms historically retained a share of base-rate interest (FCA review).
  • The FCA's Consumer Duty (July 2023) raised standards on Fair Value.
  • From 2024/25, cash can also be held in a Cash ISA without losing the S&S allowance, subject to rules.
  • Long-term cash drag costs returns versus equities.

Why cash sits in S&S ISAs

Investors keep cash for upcoming purchases, market-timing or risk management.

What the FCA has said

Reviews of cash retention practices and Consumer Duty enforcement have pressed platforms to pass on more interest.

Could rule changes raise costs?

Government and FCA have floated reforms; outcomes are still evolving. Confirm current rules.

What this means for UK investors

Holding short-term cash in an S&S ISA is fine but check the platform's Interest Rate. Long-term cash usually belongs in a cash ISA or Savings Account.

Risks to watch

  • Cash drag during Equity rallies.
  • Loss of real value to Inflation.
  • Future regulatory changes.
  • Platform-specific interest policies.