Investments 

New Isa to push P2P lending among retired investors

New Isa to push P2P lending among retired investors

A quarter of investors aged over 55 will consider moving their cash onto peer-to-peer lending platforms when the Innovative Finance Isa launches in April, according to P2P lender ThinCats.

The West Midlands-based lender said the fresh Isa wrapper would put P2P on the map for investors close to retirement age.

Under the new rules, P2P loans will be included in a wrapper called the Innovative Finance Isa, which will allow lenders to benefit from the extended £15,240 tax-free allowance set out by chancellor George Osborne in last year’s Summer Budget.

Kevin Caley, chairman and founder of ThinCats, said that Isa’s attraction to the older generation rests on the tax benefits, especially for higher earners, as well as with the trust and credibility that the tax wrapper affords.

According to ThinCats’ research, the main hesitation for those aged over 55 has been the pressure to preserve capital, with just under half of the 500 active investors or lenders surveyed stating they were worried about the risk of losing money, along with 32 per cent concerned that the sector is still too young and unproven.

Last month, advisers raised concerns about the new Innovative Finance Isa, particularly as the P2P industry is not currently covered by the Financial Service Compensation Scheme.

However, the introduction of the Isa is set to radically change this perception in those over 55s, with a quarter of those polled by ThinCats saying they are keen to explore the option come April, while half were currently undecided.

Mr Caley added: “The stage is set for a transformation in this fast growing sector, especially if those later in life decide to capitalise on P2P’s traditionally high interest rates, which are so well suited to regular retirement income.”

katherine.denham@ft.com