THE FOUNDER and chief executive of JustUs has said that the peer-to-peer lender’s Innovative Finance ISA (IFISA) is on track to launch in the third quarter, but claimed that the influx of institutional money into the sector has contributed to the delay in platforms rolling out the product.
Lee Birkett said in a message to his LinkedIn contacts that “unwelcome developments in the P2P market” had contributed to the slow pace of IFISA launches.
He cited the Financial Conduct Authority’s (FCA) crackdown on wholesale lending and the growth of institutional investment into the sector as two factors slowing down the regulatory process.
“Institutional money has made its way on to other P2P platforms at scale, this has muddied the P2P waters considerably and contributed to the delays,” he said.
“Many platforms are in the process of changing their business models to become pure P2P operators, some are unable to change as they are dominated by institutional capital and so have left the P2P market completely.”
Read more: FCA to toughen rules on P2P
The IFISA was former-Chancellor George Osborne’s brainchild, first announced in July 2015. Many of the major platforms are still awaiting full approval from the City watchdog so that they can apply to HMRC for ISA manager status, up to 18 months after applying.
The platforms that have launched the IFISA so far have seen strong demand from investors, creating a new challenge of finding suitable borrowers to match the influx of money.
“We are hopeful that the major barriers to pure P2P platforms launching the ISA in 2017/18 are now overcome and we can all move forward into the new tax year with gusto,” said Birkett. “The planned JustUs ISA launch in the third quarter of 2017 is well on track.”
The founder of the Cheshire-based P2P lender also claimed that some platforms with IFISA manager status do not operate their own company-named segregated client money accounts, but use a third-party service provider that may not be able to accept ISA transfer cheques.
“Many ISA platforms operated by banks and building societies will only issue an ISA transfer in the form of a cheque,” he said. “In short, please make sure that if you are opening an IFISA with a P2P platform, that the platform is able to accept cheques into an ISA specific, segregated client account.”