HM Treasury has confirmed debt securities like bonds will be held within the Innovative Finance Isa, as well as the simple loans offered by the peer-to-peer (P2P) sector.
Draft legislation published by the Treasury earlier this month outlined the changes to the existing Isa rules.
The Innovative Finance Isa, often referred to as the P2P Isa, was launched in April, despite the vast majority of P2P providers being without the full permissions to offer it to investors amid delays at the regulator.
In April, the Treasury’s head of business lending admitted the Isa had been slow to get off the ground, but said he was confident the rules were ready to include crowdfunding.
When former chancellor George Osborne announced the fresh Isa in July 2015, he hinted at an extension of the Isa-eligible investments, proposing that it also include debt securities and equity offered through crowdfunding platforms.
Debt securities, which include debentures or bonds, are tradable, creating the liquidity to allow investors to cash in earlier.
Bruce Davis, managing director, said: “The P2P and crowdfunding market represents a range of different investment models, and it is good to see a level playing field being established between debt securities and loans-based platforms.”
Tony Catt, financial adviser and compliance officer at Anthony Catt, said investors needed to beware. Mr Catt pointed out that returns would be reliant on the quality of the end borrowers, and the underwriting processes involved in the lending decisions.
katherine.denham@ft.com
