The firm said it was time for a single ‘One ISA’ product, incorporating cash ISAs, stocks and shares ISAs, junior ISAs and innovative finance ISAs.

Under the company’s proposals, providers would be free to choose which investments to allow within the single ISA product.

The government has also been urged to consider increasing the overall ISA allowance from £20,000 to £25,000.

Labour committed to ISA simplification in its plan for ‘Financing Growth’ published in January, as part of efforts to encourage "greater utilisation of stocks and shares ISAs."

Michael Summersgill, chief executive of AJ Bell, said: “Chancellor Rachel Reeves has rightly placed delivering economic growth at the heart of the new government’s policy agenda.

“AJ Bell has campaigned for radical ISA simplification for years and wholly supports Labour’s intention to pursue fundamental reform in this area. By combining the best features of ISAs into a single product, the government can make it easier for people to take the first step into long-term investing.”

He said that merging cash ISAs and stocks and shares ISAs would make it simpler for those holding money in Cash ISAs to transition towards long-term investing. He added the reforms could be undertaken at limited cost to the taxpayer and “the potential prize is substantial.”

HMRC data suggests there are around three million people in the UK with £20,000 or more invested in cash ISAs and no money invested in stocks and shares ISAs.

Mr Summersgill said if just half of that money was invested for the long term, an additional £30bn of investment would be unlocked. “That is a conservative estimate and the actual figure may be far higher, given that HMRC’s data indicates many of those individuals hold a cash ISA balance far in excess of £20,000.”

He added: “Given around half of ISA assets held on AJ Bell’s platform are UK-focused, simply increasing the overall ISA allowance from £20,000 to £25,000 should naturally drive more money towards UK plc. Creating a genuine incentive to invest in UK assets, such as by scrapping stamp duty on UK investments, would also help achieve this aim.”