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P2P lenders insist ISA take-up will increase (FT Advisor)

Submitted by SkinnerV on

Peer-to-peer lenders have said the Innovative Finance Isa will prove much more popular this year as more providers enter the market. Figures published yesterday (31 August) by HM Revenue & Customs revealed only 2,000 of this type of Isa had been opened in 2016 to 2017. This compared to 2.5 million stocks and shares Isas and 8.4 million cash Isas during the same year.

John Goodall, chief executive of Landbay, said: “It’s important to remember that the Innovative Finance Isa is a very new addition to the investment universe, with no major platforms making their product available before the last few months of the 2016 to 2017 tax year.

“As a result, those who have invested in the 2016 to 2017 tax year represent the tip of the iceberg. The number of accounts that has been opened this tax year has exceeded expectations.

“The average balance of Landbay’s Isa customer is currently £14,000, and with an average value of an account which has had transfers in is £18,000, both are significantly above the average stocks and shares Isa balance.”

"Those who have invested in the 2016 to 2017 tax year represent the tip of the iceberg." 

Meanwhile a spokesman for Zopa said it had only launched its own Innovative Finance Isa in June after getting authorisation by the Financial Conduct Authority and HMRC.

He said: “Our Innovative Finance Isa – and our other investment products – are only currently available to existing investors, but we’ve seen a high level of demand from those existing customers since it launched.”

Giles Cross, Folk2Folk’s chief marketing officer, said: “Since the introduction of our Innovative Finance Isa in July, we have seen a huge amount of interest from investors looking for an alternative income with tax free returns. In the months ahead and during the uncertain economic climate, we expect more investors to explore the opportunities the Innovative Finance Isa offers UK investors.”

 

Announced in the 2015 Summer Budget as a way to spark investment in small businesses, and launched last April, the Innovative Finance Isa allows savers to invest in peer-to-peer lending arrangements without tax on the gains.

But it got off to a slow start, with just 14 of these products available to investors a year after its launch, which led to some branding the Innovative Finance Isa a “damp squib”.

The figures from HMRC showed only £17m had been put into Innovative Finance Isas during 2016 to 2017 compared to £22bn and £39bn in stocks and shares Isas and cash Isas respectively.  Funding Circle and Ratesetter did not comment on HMRC's statistics.

The original article appeared in FT Advisor on 01.09.2017

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