With only a few days until the launch of a brand new type of ISA – the Innovative Finance ISA – Hannah Maundrell, Editor in Chief of money.co.uk comments on the slow approval process the Peer to Peer industry is currently struggling with; “It seems crazy we’re this close to the launch of Peer to Peer ISAs and the powers that be are still dragging their heels in giving providers the permission they need to offer these accounts.
“To date just four providers have received the green light and have full permission to offer Innovative Finance ISAs. The others are left in limbo and may not be able to launch their accounts on the 6th April which seems really unfair. It’s a shame as this initiative could be the lifejacket that stops ISAs falling into oblivion as savers begin to shun Cash ISAs in favour of ordinary savings accounts once interest on these are paid tax-free from 6th April.
“Peer to Peer ISAs provide an enticing halfway house for those desperate for a greater return; they give you a chance to dip your toe into more exciting territory without having to dip into higher risk investments. You do need to invest with your eyes open and make sure you understand how these accounts work before you part with your cash.
“This elongated permission process could cause problems for those that want to invest on the 6th April. I would urge savers to bide their time and wait for more Peer to Peer platforms to launch their ISAs as and when they get FCA permission. The first platforms off the starting line might not offer the most competitive deals. Given these products are pretty complex already, it could seriously compromise returns if you decide to transfer to another platform shortly after you invest your money.”
John Fleetwood of SRI Consultants 3D Investing said: “It’s great to see the launch of P2P ISAs. Most are consumer based, and although it’s good to see an alternative to expensive bank finance, I question the social value of lending to fund consumer spending. In stark contrast, Abundance offers loans to renewable energy infrastructure projects that have a clear environmental impact and are backed by relatively dependable income streams, so it’s good to see that they are one of just four to get the initial green light.”
Providers that have already secured permission to offer Innovative Finance ISAs:
4. Funding Tree