GROWTH Street has launched a review of the marketing of its Innovative Finance ISA (IFISA) following the Financial Conduct Authority’s (FCA) clampdown on mini-bonds.
The City watchdog has announced that marketing of mini-bonds will be restricted to sophisticated and high-net-worth investors from the new year.
Some peer-to-peer lenders, including Growth Street, have structured their IFISAs as mini-bonds.
Greg Carter (pictured), chief executive of Growth Street, said most of its investors are already sophisticated or high net worth but its compliance team is reviewing the FCA’s announcement and is looking to clarify the position of those who are defined as restricted but already have money in the product.
“We will not be able to market the product in the same way we have been doing to date as that could capture retail investors,” Carter told Peer2Peer Finance News.
“We will be changing the relevant processes so only sophisticated or high-net-worth investors see the IFISA.”
The platform has had investor certification and appropriateness tests in place for some time, so will be ready for the new P2P investor marketing restrictions that come into effect next month. The new rules limit marketing to those who are sophisticated, high-net-worth or restricted investors who only invest up to 10 per cent of their investable assets in P2P.
Carter acknowledged the move could create a situation where a restricted investor would be able to access their P2P account but would not be able to see information on Growth Street’s IFISA.
He said all investors will still be able to access the IFISA under current FCA rules until the new mini-bond restrictions are introduced in the new year.