Peer-to-peer lenders are hopeful that the coronavirus vaccination rollout will inject new life into the Innovative Finance ISA (IFISA) market, as investors will feel more confident about the pandemic coming to an end.
Platforms have said subscriptions during the 2019/2020 ISA season were more subdued as it coincided with the height of the pandemic but most have now seen a return of positive investor sentiment.
Investment into IFISAs could be held back due to big players such as Funding Circle suspending new retail loans as it focuses on the coronavirus business interruption loans scheme (CBILS), while RateSetter has been sold to Metro Bank so new investors cannot set up a tax wrapper with the platform.
However, other players such as Assetz Capital are expecting a boom if there is sustained positive news on the pandemic.
“Even during a global pandemic there was a negligible impact on the funds in our ISA accounts,” Martin Heelam, director of investor relationships at Assetz Capital, said.
“Given this resilience we’re confident that if infection rates reduce and the vaccine roll-out continues apace we will see a very positive ISA season – maintaining the year-on-year growth we’ve enjoyed so far.
He said investor sentiment hinges on infection rates, the vaccine rollout and “an acceleration towards some kind of normality.” ArchOver has also seen an uplift.
“We have seen investors’ confidence rise over the past months and we hope this continues and will have a positive effect on our IFISA registrations and transfers in,” Charlotte Marsh, managing director of ArchOver, said.
“We had a slower IFISA intake during March-April 2020 due to the uncertainty and we believe that this year will look more like March-April 2019.”
Other platforms such as HNW Lending and Proplend are also seeing more IFISA money coming in, with the latter seeing transfers from other P2P lenders no longer offering the product.
Meanwhile, Abundance, which spent much of last year helping to push community municipal investments on behalf of local councils, said demand has been strengthened by more investors seeking investments aligned with their values including tackling the climate crisis.
The IFISA market is believed to have broken the £1bn barrier in the 2019/2020 tax year, according to data from The Investing and Saving Alliance (Tisa).
The total amount invested in the IFISA tax wrapper, based on figures from its own members, reached £1.14bn by February 2020.
P2P lending members of Tisa include Zopa and RateSetter.
No further statistics have been published from Tisa members since the pandemic hit the UK.
In contrast, the latest HMRC data released in June 2020 – based on ISA manager returns for the 2018/2019 tax year – shows £328m was invested in IFISAs from 38,000 accounts. This is up from £277m invested in the 2017/2018 tax year but there were 49,000 account openings during that year.
The figures take the total invested in IFISAs to £641m across 92,000 accounts. However, HMRC is still claiming the subscription figures are unreliable due to a low level of data.
Read more: What’s next for the IFISA?