GROWTH Street has launched its Innovative Finance ISA (IFISA), which offers higher returns but less liquidity than its classic product.
The peer-to-peer business lender has informed its customers of the new tax wrapper and confirmed that it will offer a fixed rate of 5.8 per cent with a one-year term.
Its non-ISA product offers returns of up to 5.3 per cent with 30-day access.
With the classic Growth Street account, investors are matched directly with borrowers.
In contrast, with the ISA account, funds are invested in an unlisted bond for a period of 12 months, Growth Street said on its website.
The proceeds of the bonds will then be lent to the same portfolio of borrowers as with the classic account, but with a fixed interest rate that is not dependent on the deployment rate, market rate or reinvestment.
“To protect our ISA investors against deployment and rate risk, Growth Street has committed to ‘top-up’ any shortfall in interest payments so that we will always be able to pay a rate of 5.8 per cent at the end of your one-year term,” Growth Street said.
“This commitment from Growth Street means you will receive your full 5.8 per cent even if we haven’t been able to deploy your funds for the full one year term, or if the market rate changes.”
It is a flexible ISA, meaning that investors can withdraw their money and put it back in again within the same tax year. Investors can also transfer previous years’ ISAs into the Growth Street ISA.
At an investor event in London in March, Growth Street chief executive Greg Carter (pictured) told Peer2Peer Finance News that the platform had been seeking customer feedback ahead of a second-quarter IFISA launch.
“The platform isn’t expecting major inflows when it launches as most funds typically come in nearer the end of the tax year, but investors just want to know that it is available,” he said.
“Many will also want to drip feed into it throughout the tax year.”