A working group has been established to improve HMRC’s ISA manager register, in response to the Gloster report’s call for better engagement between regulatory bodies.
Peer2Peer Finance News understands that the new director-led steering group, which is made up of HMRC, Treasury and Financial Conduct Authority (FCA) representatives, will aim to improve intelligence sharing between HMRC and the City watchdog.
This has already resulted in new intelligence being shared and acted on. HMRC’s ISA manager list has been updated, with more than 30 companies removed from the register and new information added to make it easier for investors to understand.
Dame Elizabeth Gloster led an independent review into the supervision of mini-bond provider London Capital & Finance (LCF) prior to its collapse, which was published late last year. The report highlighted a number of regulatory failings which may have contributed to the LCF crisis, including a lack of engagement between the FCA and regulated entities.
Recommendation 10 from Dame Elizabeth Gloster’s report specifically stated that “HM Treasury should consider addressing the lacuna in the allocation of ISA-related responsibilities between the FCA and HMRC”.
While the FCA does not have direct responsibility for overseeing ISA regulations, firms must be FCA-authorised to be eligible for ISA manager permissions.
In March, Peer2Peer Finance News reported some anomalies among the Innovative Finance ISA (IFISA) managers on the HMRC list.
Several platforms were still listed as having IFISA permissions, even though they had exited the space, and more than a dozen companies continued to have IFISA permissions despite the fact that their business was no longer a going concern.
By 19 April, there were 82 companies listed as having IFISA permissions, down from 91 companies at the end of March.
The working group appears to have removed IFISA permissions from 11 companies: Access Commercial Finance, Crowdinvesting B.V, Formax Credit, Gallium PE Depositary, Go 2 Business Loans, Haich and Associates, KapSecure Asset Management, London and Eastern Property, NKK Finance (trading as Flender), Transcendent Real Estate and UK Bond Network.
Two new IFISA permissions were issued, to Assetz Exchange and Kapwealth. HMRC has also added a note to some of its listings to indicate where a company has gone into administration.
However, Lendy and FundingSecure are both still listed as having full IFISA permissions, even though these companies have been shuttered for more than a year. Peer2Peer Finance News understands that Lendy never actually launched its IFISA product, and never had any ISA funds under management.
Peer-to-peer lending platforms have welcomed the update, saying that an accurate and updated list of IFISA managers will help to build trust and weed out any misinformation that could reflect badly on the P2P sector.
“If you provide a register it should be as up to date as possible to prevent any misleading communication,” said Filip Karadaghi, chief executive of LandlordInvest.
“Most of the recommendations [from the Gloster report] now seem so obviously sensible, you wonder why the FCA never did many of these things before; they’re generally positive and sensible developments,” added Thomas Donegan, regulatory partner at Shearman & Sterling, the law firm which represents LCF investors.
“There ought to be an ‘ISA manager status’ application process for FCA-authorised firms. Regulated firms making even minor changes to their business models in other ways are asked to produce thick reems of documents and forms for the FCA, which are subject to extensive review and approval processes. But for ISA manager status, at least for firms already approved by the FCA like LCF, they just filled in a short form, sent it to HMRC and became ISA regulated.”
A spokesperson from the UK Crowdfunding Association (UKCFA) said that the organisation had questioned HMRC on the ISA manager list being out of date.
“The Gloster report highlighted a lacuna between the FCA, Treasury and HMRC on the registration of ISAs and the register of ISA managers,” the UKCFA spokesperson said.
“They have had to take on board a closer inspection of whether that register is up to date. There were ISA managers no longer offering ISAs or had a change of permissions and that was no longer reflected on the register, there was a lack of focus making sure that was up to date and accurate.
“That was something the UKCFA raised to HMRC – us and a number of others queried some of the names on the register.
“I think the process and monitoring of who was an ISA manager needed to be improved and hopefully now following the Gloster review it will be.”