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Peer2Peer Finance News | September 18, 2019

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Lending Works launches IFISA

Lending Works launches IFISA
Suzie Neuwirth

LENDING Works has announced the launch of its Innovative Finance ISA (IFISA) and expects a “large spike” in funds over the next two months, as retail investors take advantage of ISA season.  

The peer-to-peer lender is the first member of the eight-strong Peer-to-Peer Finance Association to launch its tax-free product, having received authorisation from the Financial Conduct Authority (FCA) and HMRC in late 2016.

“We are delighted to announce the launch of the Lending Works ISA, giving investors the opportunity to earn higher rates of interest by using their ISA allowance to invest in P2P loans,” said founder and chief executive Nick Harding (pictured). “This launch comes in response to unprecedented demand by investors, who are looking to new asset classes for income growth, at a time when other investments and bank savings accounts are often delivering mediocre returns, if at all.”

The platform, which markets itself as the first P2P lender to have insurance protecting lenders against certain borrower default risks, said it expects a significant influx of new investors on the back of the launch. It is reportedly planning to limit initial investment to £1m in order to match investor demand with borrowers, according to the Telegraph, who first reported the story.

Read more: Crowdstacker IFISA attracting £1m a month         

A recent internal survey of Lending Works’ existing investors found that 88 per cent plan to open an IFISA, with around a third expecting to invest between £10,000 and the maximum threshold of £15,240 of their annual ISA allowance into the IFISA before the end of the tax year in April.

“Given the extraordinary level of interest from both existing and prospective customers in the build-up to the launch of our ISA, we expect to see a large spike in the volume of funds coming to our platform over the next couple of months as savvy investors look to make the most of this year’s ISA season,” said Harding.

Although 23 platforms are now authorised to offer the IFISA, the majority have not launched the tax-free product yet. Lending Works becomes the fifth P2P lender to launch its IFISA, after property platform LandlordInvest launched its ISA last month. Landbay is unlikely to be far behind; the buy-to-let lender’s chief executive John Goodall told Peer-to-Peer Finance News they are aiming to launch the IFISA in the first half of this month, after gaining FCA approval just before Christmas.

The ‘big three’ – Zopa, RateSetter and Funding Circle – are still awaiting regulatory authorisation, having applied to the City watchdog more than a year ago.

Read more: Half of over 50s unaware they can open an IFISA