The heads of peer-to-peer lending platforms have criticised the Financial Conduct Authority (FCA) and the government for mis-handling the launch of the Innovative Finance Isa.
The new Isa - which lets peer-to-peer lenders invest in small businesses using a tax-free wrapper - was announced in the Summer 2015 Budget.
But as the 6 April start date passed, only two P2P lending platforms had received the necessary permissions to offer it.
Providers must be licensed by the FCA – a process which can take up to 12 months – before applying to HM Revenue & Customs for Isa manager status, which takes an additional two weeks.
The FCA was also made responsible for 30,000 consumer credit firms, which meant platforms have had to apply for new licences.
Stuart Law, founder of P2P platform Assetz Capital, said the handover has “completely drained the FCA”, suggesting P2P platforms have been pushed to the bottom of the authorisation pile as a result.
He said the FCA has been dealt an “impossible task”, an allegation denied by an FCA spokesman.
In a letter sent to 31 platform providers and seen by Financial Adviser, the City regulator told platforms they might have to wait longer because regulatory changes have made them “unable to make authorisation decisions”.
Bruce Davis, cofounder of Abundance, the first P2P platform to complete all the necessary permissions, said platforms might have underestimated the scrutiny they would need to go through.
However, according to a spokesman, HM Treasury expects a number of companies to be in a position to offer the new Isa from 6 April. It said others were working with the FCA to ensure they meet the right regulatory standards.
“It is right that firms are required to meet these standards before they start offering Innovative Finance Isas. This is important to protect consumers.”
Adviser View
Susan Tague, chief executive of Uxbridge-based Altero Financial Services, said she would be recommending the new Isa to clients.
She said: “Until they are more widely available in the marketplace and have a track record it is difficult to know whether or not they work in practice.”
katherine.denham@ft.com
