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Peer2Peer Finance News | November 21, 2017

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IFISA investments ‘to take off’ in 2018

IFISA investments ‘to take off’ in 2018
John Fitzsimons

2018 MAY be the year in which the Innovative Finance ISA (IFISA) finally takes off, an industry expert has suggested.

Neil Faulkner, chief executive and founder of peer-to-peer analysis firm 4th Way, noted that the small platforms that have already launched IFISAs have seen massive boosts to their lending volumes, and suggested that the amount of money in IFISAs “will go up many-fold” when the major platforms have their own accounts on offer.

RateSetter this week announced that it has gained full FCA authorisation, and is planning to launch its IFISA before the end of the tax year. The platform said that its focus was on “making the best possible IFISA product for our lenders” and that it had established an IFISA mailing list to keep people updated on progress.

Take-up of IFISAs has been relatively slow so far, with HMRC figures suggesting that just £17m was invested across 2,000 accounts in the 2016-17 tax year, though these have been queried by P2P firms.

While all three of the major platforms now have full authorisation, they have only made tentative steps towards full IFISA launches. Zopa launched its IFISA back in June, but has restricted it solely to existing investors in order to prevent an investor/borrower imbalance.

Funding Circle received ISA manager status in August, less than two months after gaining full authorisation, and has also said it hopes to have its IFISA in place by the end of the tax year.

Faulkner said that it will take many years for IFISA investing to grow to levels where it can be compared to other types of ISAs.

“I think that we can expect, for the time being, that the majority of money going into IFISAs will continue to be existing investors shifting their lending from outside the tax-free wrapper,” he said.

“That means that even as IFISA investment rises very quickly in 2018, it will not mean a vast boost to the total amount lent through P2P platforms. That said, even without IFISAs, the industry is growing at a decent, and sensible, rate. It should be up one fifth to one third in 2017.”