Concerns over the future of Cash ISAs have been raised after rumours surfaced that Rachel Reeves may cut the £4,000 cap on contributions, with experts warning that this limit could have worrying financial consequences.

Carol Knight, CEO of The Investing and Saving Alliance (TISA) has argued against the government's rumoured move to reduce the tax-free savings limit on Cash ISAs, stating that the move would not encourage savers to invest in stocks and shares ISAs, as the real barriers to investing are lack of confidence, knowledge, and fear of risk.

The TISA is a non-profit membership organisation that collaborates with key industry players to influence the development of the UK's financial services sector and promote financial wellbeing for consumers.

Carol Knight wrote in a piece for the Daily Mail: "Slashing Cash ISA tax relief won’t create the investment culture the Chancellor seeks, tackling the real barriers to investing will."

An ISA (Individual Savings Account) is a tax-efficient savings or investment account allowing UK residents to save or invest money without paying tax on the interest, dividends, or capital gains earned, with contribution limits that vary depending on the type of ISA each tax year.

By lowering the contribution cap, savers may find themselves unable to maximise the benefits of tax-free interest, which could hinder long-term savings growth, according to Knight.

Knight has urged the government to reconsider and warned that rushing these changes could lead to unintended consequences, as seen in previous speculative concerns about pensions.

The expert warned that such a move could harm consumers' financial wellbeing, especially older individuals who rely on cash savings for short-term needs and emphasised the importance of educating consumers about long-term investing.

She stressed the need for clearer, less complex savings options to avoid unintended consequences.

Knight added: "I urge the Government to take note of our concerns. In nearly every aspect of life, changes made in haste often produce an array of problems later.

"That’s likely to be even more the case in the particularly interrelated world of financial services.

"I urge them to step back from this rumoured move, assess the evidence and work with us and others to get the result we all aspire to."