This news comes a week after George Osborne’s Autumn Statement, which included this key extract: “The government is exploring whether to increase the number of retail bonds eligible for stock and share ISAs by reducing the requirement that such securities must have a remaining maturity above 5 years.” This announcement may be viewed as a glaring statement-of-intent, even if the Mr. Osborne stopped shy of actually allowing peer-to-peer lending within ISAs.
Mr. Vine-Lott has spoken to the Treasury and established a taskforce – composed of distributors, administrators and platforms – in order to explore how rules on the matter should be defined. He intends to invite peer-to-peer lenders into the conversation soon.
In terms of Mr. Osborne’s talk of a relaxation of the rules pertaining to where stocks and shares ISAs can be invested, crowdfunding ventures are likely to be the main beneficiaries of a consultation into the issue. The peer-to-peer lending element would be offered exclusively for stocks and shares ISAs, not their cash counterpart.
Mr. Vine-Lott said: “The FCA’s intended regulation of the industry is likely to pave the way for using ISAs for peer-to-peer lending, but our recommendation is to use the stocks and shares allowance.
First, I do not see how such an investment could be defined as a deposit under the terms set out in the FCA and ISA handbooks. Secondly, it will surely make a bigger difference to peer-to-peer schemes if investors are allowed to put more money into them.”
Mr. Vine-Lott believes that the reform of stocks and shares ISAs will help the Chancellor to achieve his aim of reinvigorating SMEs. The Autumn Statement demonstrated that government is aware of the critical role played by SMEs in the economic recovery – as much was obvious through the ISA-related announcements and the redirection of the Funding for Lending initiative towards businesses.
As a statement from Rebuildingsociety said: “SMEs had a lot to welcome in the Autumn Statement with business rate rises capped at 2% and the scrapping of employers’ National Insurance contributions for staff aged under 21 estimated to be worth £500 million a year from 2015. There are also £1,000 rate cuts for firms moving into the High Street retail premises such as pubs, restaurants and cafes.”
Ashley Clarke, director of Staffordshire-based Needanadviser.com, said: “I am very confident that progress will be made if TISA has set up a working party because the organisation is good at getting both the regulator and the Treasury to participate in these matters. Given the fact we are in a world of low interest rates, P2P can offer a reasonable rate and this area is not a million miles away from corporate bonds and sovereign debt. The UK has a huge savings gap and we must make both ISAs and pensions more flexible.”
