Insured P2P lending outfit Lending Works is seeing strong demand for the Innovative Finance ISA among its investors, and may also have cracked the problem of multi-platform IFISA investment.
Lending Works has surveyed its lenders with a view to gauging appetite for the recently launched IFISA, finding that 89% of respondents plan to take advantage of the product once able to. Lending Works, like the majority of peer-to-peer lenders, is awaiting full authorisation from the FCA – and will not be able to offer IFISA investments until that wait is over. But all signs suggest that the tax wrapper will prove popular when the time comes.
31% of survey respondents expect to use between £10k and £15,240 (the maximum allowance) of their ISA subscription on a Lending Works IFISA. By contrast, just 11% of lenders are not planning to open an IFISA. A further 32% were unsure of the amount they would subscribe. 8% expect to invest up to £5k through the IFISA. This news comes a day after HMT's Fayyaz Muneer admitted that the IFISA has "not exploded" in the way that many thought that it would thanks to delays in the authorisation process.
We’ve long been of the understanding that IFISA money may only be invested with one P2P provider in a given tax year. In other words, investors would have to invest across a number of tax years in order to build up a multi-platform IFISA. But Lending Works rightly points out that investors are free to transfer unlimited funds from pre-existing ISAs into IFISAs, and are free also to split these funds across a range of different peer-to-peer lending platforms. HMRC has confirmed this contention.
Lending Works went on to question those of its investors who had indicated that they would be subscribing the bulk of their allowance to an IFISA about whether they would also be transferring existing ISA money into an IFISA. A little over two thirds of respondents indicated that they would indeed be making such a transfer – mostly from a cash ISA, while 16% ruled out the move.
“Like us, our lenders are clearly very excited about the prospect of our platform delivering the IFISA, and it is encouraging for us to see this enthusiasm reflected in the results of this survey. When you consider how established the other two categories of ISA are, it is a huge vote of confidence in both our company and peer-to-peer lending as a whole to see so many investors willing to commit such a significant portion of their ISA allowance to this new type of wrapper.”
“Obviously, we’re now champing at the bit to get the go ahead from the FCA to make our IFISA a reality. Ideally, we would have liked to have been ready to offer the IFISA from day one, but we respect the need for a detailed and thorough authorisation process, and, given recent communications with the FCA’s representatives, are hopeful of offering the new product in the next few weeks.”
AltFi is returning to Amsterdam for its second annual Summit in the city. The inaugural event last year was a roaring success, with key figures from across Continental Europe's alternative finance and digital banking sectors highlighted. These included Jeroen Broekema, managing director of Funding Circle Netherlands, and Mieke van Engelen, head of innovative partnerships at ABN AMRO's standalone lending platform, New10.