Investors have put just £17m into Innovative Finance Isas in their first year in existance, according to data from HM Revenue & Customs.
This is significantly less than both stocks and shares Isas and cash Isas, which had £22bn and £39bn plunged into them respectively during 2016/17.
Announced in the 2015 Summer Budget as a way to spark investment in small businesses, and launched last April, the Innovative Finance Isa allows savers to invest in peer-to-peer lending arrangements without tax on the gains.
But it got off to a slow start, with just 14 of these products available to investors a year after its launch, which led to some branding the Innovative Finance Isa a “damp squib”.
Despite the lack of providers during 2016/17, the number of Innovative Finance Isas opened during that year was around 2,000, a fraction of the number of stocks and shares Isas.
In total there were 2.5m stocks and shares Isas opened during 2016/17 and 8.4m cash Isas opened.
The number of cash Isas opened in 2016/17 decreased by nearly 1.6m – the largest decline since the products were introduced in 1999.
According to HMRC the average amount of money in an Innovative Finance Isa was £8,500 – similar to the £8,623 held in stocks and shares Isas.
The average amount of money in cash Isas was £4,622.
In total, 11.1m adult Isas were opened in 2016/17, down from 12.7m the year before.
The number of Isas being opened each year has been declining since 2010/11 when they were at a peak of around 15m.
The total amount of money in Isas also fell by £18bn to around £62bn but this has brought it back to around its 2013/14 level.
There was a large increase in subscription levels of £26bn in 2014/15 following the annual limit being increased significantly to £15,000 in any combination of cash or stocks and shares.
Since that one-year surge, subscription levels have been gradually falling back to their previous levels.
Scott Gallacher, director of Rowley Turton, said: "The problem with this is it is all relatively untested and that's what worries people.
"Your normal retail consumer is unlikely to come across Innovative Finance Isas. They will go to the bank, the building society or MoneySupermarket.
"A lot of advisers are cautious in this area and worry about the risks."