News

IFISA – Looking to the future

Published on February 1, 2017

The Innovative Finance ISA (IFISA), which allows investors to hold peer to peer investments within a tax free ISA wrapper, was rolled out in April 2016.

 

At the time, no P2P platforms were authorised as ISA Managers, a requirement to offer loan investments within an ISA. During the past six months a handful of platforms have been granted ISA Manager Status and we’ve started to see the IFISA finally come to the market. But just how big could the IFISA market become for the P2P sector in the UK?

 

As Proplend moves closer to launching its own IFISA offering, we look at some of the numbers that could give us an idea as to the potential for this market.

 

There is currently £260bn (£260,608,000,000) on deposit in Cash ISA accounts.

If the IFISA can capture just;

  • 1.1%* of this Cash ISA market – it will double the current total of outstanding P2P loans** in the UK
  • 3.5%* of the Cash ISA market – it will double the cumulative UK peer to peer loan volume over the past 10 years***.

 

On top of this, there’s almost the equivalent amount of cash sitting in Stocks and Shares ISA’s waiting to be invested (Cash ISA 52%: Stocks and Shares ISA 48%).

 

In the continuing low interest rate environment, with many investors looking for fixed income returns, the introduction of the IFISA could be truly significant – particularly for investors that have built up ISA pots and now want to take an income without the volatility of stocks and shares ISAs.

 

 

*% of total Cash ISA volume Nov 2016 Table A6.1 Bank of England Monetary and Financial Statistics
**P2PFA data Q4 2016
***Liberum AltFi Volume Index Jan 2017