Alternative finance working group launches advisor-facing survey on getting AltFi products into SIPPs.
A working group on alternative finance run by the Tax Incentivised Savings Association (TISA) has launched a survey on whether self-invested personal pensions (SIPPs) should be opened up to include alternative finance investments.
The survey comes at a time when peer-to-peer lending and debt-based crowdfunding are becoming “increasingly mainstream”, according to TISA. The association references the fact that the UK industry recently crossed the £10bn mark in cumulative output, while also citing the increasingly active Innovative Finance ISA market, as well as the fact that the regulator recently made advising on peer-to-peer loans a regulated activity.
The short survey of 14 questions aims to ascertain whether financial advisors feel that peer-to-peer loans and debt-based securities (bonds) should be allowed in SIPPs.
The questions seek to gauge how well respondents understand alternative finance as an asset class, to what extent their clients have been enquiring about it, their thoughts on its suitability as a recommended investment, and their opinions on what the impact of including these kinds of investments within SIPPs would be.
Investors have previously been able to invest in peer-to-peer lending via SIPPs with certain providers, such as secured business lender ThinCats.
But these channels were opened at the discretion of a handful of SIPP administrators, including Greyfriars, which have since pulled back from the alternative finance market. New capital adequacy rules introduced in 2016 made it harder for administrators to hold any “non-standard assets” – which broadly-speaking means anything that isn’t liquid. Connected party and taxable property concerns were also raised at this time.
But Jake Wombwell-Povey (pictured), CEO of Goji and chair of TISA’s working group on alternative finance, said that alternative finance is a good retirement product, one which is already being invested in by a huge number of retail and institutional investors. He believes the asset class should be easier to invest in via a SIPP.
He argues that the major peer-to-peer providers are actually a lot more liquid than is sometimes supposed, and that SIPP rules are now out of kilter with ISA regulations, which allow the inclusion of such products.
TISA will soon be putting forward a proposed carve-out to facilitate the inclusion of alterative finance in SIPPs while limiting any “unforeseen adverse consequences”.
The ultimate aim of the working group is to lower the compliance burden for SIPP administrators, thereby opening up the asset class to a wider range of investors.
The TISA group will look to combine the results of this survey with its own technical and quantitative, liquidity-focused research to put a strong argument to the FCA, HMT and HMRC on alternative finance and SIPPs.