InvestmentsDec 16 2014

Peer-to-peer loans need a separate Isa: Tisa

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Peer-to-peer loans should be invested in a separate Isa type vehicle is one of the recommendations made by the Tax Incentivised Association in response to the Treasury’s consultation on the inclusion of peer-to-peer loans as an Isa qualifying investment.

In October the government launched a consultation on how best to include peer-to-peer loans in existing stocks and shares Isas, or whether a new type of Isa should be developed specifically for them.

This consultation, which closed on 12 December, sought views on whether P2P loans should be subject to the same transfer requirements as existing Isa investments, as well as whether they were suitable assets to be held in Child Trust Funds and Junior Isas.

Tisa’s recommendations in response to the consultation were that P2P loans should be invested in a separate Isa type.

The organisation said this would permit appropriate regulation and controls over transferability and liquidity to be controlled in ways that do not impact stocks and shares Isas and cash.

Secondly, care should be taken to ensure that the costs to the existing market of complying with the additional reporting and compliance requirements are minimised.

Tisa said in a statement: “Many, perhaps most, of the existing market will not, initially at least, offer peer-to-peer loans. The impact of amendments to HMRC reporting, to disclosure, and to systems should be minimised. This applies in particular to the introduction of a peer-to-peer Isa.”

Finally, Tisa said that the government should look to amend regulations to permit qualifying loans to be included in collective investment vehicles, whether closed end or open ended.

The organisation said that this would make such loans more accessible, and thus enable retail investors to get exposure to this asset class through existing Isa managers, without forcing Isa managers to become P2P platforms.

Jeffrey Mushens, Tisa’s technical director, said: “We have long sought to have peer-to-peer loans included within the Isa ‘family’. This consultation is a welcome step in addressing how best to accomplish this in a way that is good for the consumer and practical for the industry to implement.

“We believe that the inclusion of peer-to-peer lending will be very popular with consumers who are already benefiting from the greater flexibility introduced to the Isa regime earlier this year. As a nation we need to increase the amount we save and invest and these changes will provide further encouragement.”

ruth.gillbe@ft.com