Investments  

P2P providers sanguine about new Isa

P2P providers sanguine about new Isa

Peer-to-peer platforms have said they are not fazed by the reluctance of advisers to push the Innovative Finance Isa, which will go live on 6 April, having been given the go-ahead last July.

Colin Hodges, head of investor operations at peer-to-peer lending platform 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 clients’ investment into P2P lending, while also developing its product that will become available through investment platforms.

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Kevin Caley, managing director of online P2P lending platform ThinCats, said advisers had “a right to be cautious” given that P2P is a new area and that it was important nobody was frightened of 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 with it, and realise it is “an important opportunity for their clients”.

Mr Caley believed that a lack of adviser support was an issue the industry needed to overcome, and said part of the problem was that advisers had no incentive to use the products.

He said: “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.”

Mr Caley also pointed out that the UK’s largest peer-to-peer lending service Zopa, which has been going for a decade, survived the economic downturn, and while ThinCats had not been through a recession, “it has not exactly been a boom time either”.

Andrew Lawson, chief product officer at Zopa, said he did not see adviser wariness about the new Isa as a problem. He said that the Isa status was a huge vote of confidence for the industry and an “important milestone in P2P’s journey into the financial mainstream”, but he also pointed out that as most P2P platforms have not been tested across credit cycles, “it is natural to be cautious”.

James Meekings, co-founder and UK managing director of Funding Circle, said the introduction of the Innovative Finance Isa is a “pivotal moment” for the industry.

He said: “We have seen strong appetite for the Innovative Finance Isa, with 41 per cent of investors saying they would invest more in marketplaces like Funding Circle when included within Isas.”

katherine.denham@ft.com

Key facts

* Peer-to-peer loans can be held in an Isa from 6 April.

* The government will proceed with its proposal to make advising on peer-to-peer loans a regulated activity. All firms currently authorised to advise on investments will be eligible to elect to have this authorisation automatically conferred upon them.