Zopa unveils Innovative Finance Isa

Zopa unveils Innovative Finance Isa

Peer-to-peer (P2P) lender Zopa has announced that, subject to FCA licensing, it will launch an Innovative Finance Isa on 6 April.

The Isa will allow customers to earn tax-free interest on all loans that are purchased within an Innovative Finance Isa wrapper.

Zopa’s new Isa will offer rates the same as on the lender’s standard products.

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The rates for the one-year, two-year and three-year term product are 3.8 per cent, while the four-year and five-year term are set at 5 per cent.

There will be no additional fees or charges.

Zopa unveiled details of their new product as former chairman of the then FSA, Lord Adair Turner, said that losses on P2P lending would “make the worst bankers look like absolute lending geniuses.”

Bob Wilson, financial adviser at GreenSky Wealth in East Anglia, said: “Someone who is interested in that kind of investment, why not do it?

“If I was going to recommend that to someone, I would query the level of risk. How safe is it? I would need more detailed information about the likelihood that that interest rate would be paid.

“What is the likelihood of the interest rate not being paid? If it is a small business, how strong is it? Assessing the level of risk you’re taking would be the key thing for any recommendation.

“Doing it within an Isa is good, so why not? It is whether the underlying investment is a good one, and the level of risk.”