DIY Investor Magazine
/
March 2016
25
In the interim, IFISA savings may be at risk and
investments may not perform to the predicted
level,although many P2P lenders companies have
protection schemes in place to mitigate at least some of
the risk.
Currently just 6% of more experienced investors
use P2P but recent research by lender ThinCats
suggests that 40% of ‘everyday’ investors are
considering it when the new wrapper is launched which
could see the market expand by as much as one third.
55% of investors polled said they were ‘attracted’ to
P2P, but the perceived risks involved were a key barrier
for entry (43%), as well as the relative early stage of the
industry and its unproven track record.
There has inevitably been some consolidation and
some failures in this fledgling sector and saver looking
for a higher degree of protection could seek out
members of the Peer-to-Peer Finance Association
which subjects all its members — Zopa, RateSetter,
Funding Circle, LendInvest, Madiston, ThinCats,
MarketInvoice, Landbay and LendWorks — to high
levels of scrutiny before admission.
The government says that it will continue to ‘explore the
case’ for including equity crowdfunding - where
individuals can invest in start-up and early stage
companies - within ISA wrappers.
Debt securities are seen to come with more protections
for the investor than equity crowdfunding although the
government believes there could be a long term benefit
of its inclusion to investors as well as UK PLC.
There is not expected to be a requirement for the
IFISA to be transferable to another sort of savings,
investment or loan although existing ISAs may be
transferred in and retain their tax free status; instead,
investors will be able to withdraw their funds, subject to
the T&Cs of their account, and transfer it after it has
been converted to cash.
Since April 2014 the P2P industry has been regulated
by the Financial Conduct Authority (FCA) which gives
savers an element of protection, and although savings
are not currently covered by the Financial Services
Compensation Scheme, there is a pledge to ‘review
the regulatory framework in 2016’ and give it fresh
consideration.
55% OF INVESTORS POLLED SAID THEY WERE
‘ATTRACTED’ TO P2P, BUT THE PERCEIVED RISKS
INVOLVED WERE A KEY BARRIER FOR ENTRY (43%),
AS WELL AS THE RELATIVE EARLY STAGE OF THE
INDUSTRY AND ITS UNPROVEN TRACK RECORD.
More information about ISA options and allowances can be found at
