Peer-to-peer platforms have said they are not fazed by reluctance among advisers to push the Innovative Finance Isa, but admit work needs to be done to persuade the intermediary community to embrace it.
When advisers were asked by FTAdviser last month if they would consider offering the new product to clients, many said they were wary that P2P lending is not currently covered by the Financial Services Compensation Scheme.
They also warned it is not clear what the default rate for P2P loans would look like in a stressed economic environment and their clients had as yet shown no interest in the product.
However, P2P lenders RateSetter, ThinCats, Funding Circle and Zopa have told FTAdviser there has been strong interest in the Innovative Finance Isa from both new and existing customers.
Colin Hodges, head of investor operations at RateSetter, said: “We recognise that we as an industry need to work to persuade advisers to embrace peer-to-peer lending.”
His firm is actively trying to engage advisers by creating a portal that allows them to manage their client’s investment into P2P lending, while also developing its product that will become available through investment platforms.
Despite P2P facing certain challenges in the adviser space, Mr Hodges said there is a huge appetite for the new Isa among investors.
He pointed to research carried out this month, which found 60 per cent of Cash Isa holders were unhappy with their current interest rate and a quarter were already interested in moving to a new Innovative Finance Isa, five months before they even become available.
Mr Hodges said: “We are confident that the opportunity to invest into our platform via an Isa will give rise to a significant increase in interest in the product, and we look forward to working with both direct investors and financial advisers to help them to understand our products and how to access them.”
Kevin Caley, managing director of ThinCats, said advisers have “a right to be cautious” given that P2P is a new area and that it is important nobody is frightened by rushing into unknown territory.
Despite the introduction of the new Isa, he conceded it would still take a few years for advisers to get up to speed and realise it is “an important opportunity for their clients”.
Mr Caley said the lack of adviser support is an issue the industry needs to overcome, and said part of the problem is advisers have no incentive to use the products.
“There is a lot of fear and uncertainty being spread by people in the market. This is quite radical and there could be the opportunity for people to criticise them for that suggestion and IFAs are desperately worried about being criticised.
“IFAs are going to be extra cautious - which is their job really - but some are also making sweeping statements without really understanding what they are talking about.”