Greater ISA flexibility proposed by the government could hit profits for the likes of Hargreaves Lansdown PLC (LSE:HL.) and AJ Bell PLC (LSE:AJB), according to AJ Bell.
Some of changes announced in the autumn statement coming into effect from April 2024 look interesting, the Swiss bank said.
The government proposed to allow multiple ISA subscriptions of the same type every year, as well as allowing partial transfers of ISA funds in-year between providers.
"This raises the possibility, for example, for investors to open multiple cash ISAs throughout a tax year, transferring between providers if more attractive rates become available."
As well as being a positive outcome for consumers, as it potentially leads to more competitive rates on offer, there is also the possibility that investors could transfer 'dormant' cash out of stocks and shares ISA accounts into a cash ISA, even for a short period of time, before transferring back into the stocks and shares ISA in the future.
Previously, ISA transfers in-year were only allowed if the full balance was transferred.
This should allow greater scope for individuals to "sweep cash balances within stocks and shares ISAs into higher interest bearing cash ISA accounts", the UBS analysts said.
While this has always been possible for savings invested in previous tax years, it was more difficult for savings made in the current year where the whole balance previously needed to be transferred.
"Cash sorting of this kind will still involve proactive effort and some administrative burden, and so we do not anticipate a 'rush' to take advantage of this new flexibility.
"However, with the government also announcing the digitalisation of the ISA reporting system as part of this statement, it should become easier to make these transfers as digital tools become available," the analysts said.
For the likes of AJ Bell and Hargreaves this may mean more activity from its ISA customers seeking to partially transfer cash balances into and out of accounts, either into cash ISAs offered on their cash savings hubs, which in the case of HL would see it earn some commission, or off the platform entirely to a bank or building society ISA.
UBS noted that HL currently earns around 2.0% on client cash held on its investment platform, accounting for around 60% group profit.
They estimated this figure at nearer 80% for A J Bell.