THE ARCHITECT of the Innovative Finance ISA (IFISA) has said he is confident about the future success of the tax wrapper, even if it hadn’t got off to a “dramatic” start.
George Osborne unveiled the new product during his tenure as chancellor to great fanfare, but critics say uptake has been slow, attracting just £36m of subscriptions in its first year.
“Sometimes expectations can be set very high and if they’re not immediately met there’s a sense the approach has failed,” Osborne said at LendIt Fintech conference in London, adding that this should not be taken as an indicator of future viability.
“I’m confident this will work even if it hasn’t been quite as dramatic a start,” he said.
Osborne suggested that the uncertain macro environment could have played a part in slow uptake of the IFISA.
“People are quite cautious at the moment anyway,” he said. “People who have been selling investment products for years will know it’s quite difficult to get people to come out of cash.”
The IFISA saw greater inflows in its second year, with £290m put into the product in the 2017/2018 tax year. The entrance of the ‘big three’ peer-to-peer lenders into the IFISA market is thought to have boosted awareness and uptake.