The Consumer Take on P2P ISAs

By Ryan Weeks on Thursday 5 March 2015

Alternative Lending

Members of the P2PFA have grouped together in order to delve deeper into the ever-present question of P2P ISAs.

The government has now had a little under five months to mull over responses to the P2P ISA consultation – a month long window that began in mid-October 2014. In the mean time, various peer-to-peer lenders have been vocal in their support of a third ISA type – existing specifically for peer-to-peer investment and wholly distinct from the stocks and shares variety of the tax wrapper.

RateSetter, ThinCats and Madiston LendLoanInvest have each taken to AltFi in one form or another in order to express their support for the third ISA type. It is no coincidence that each of those platforms is a member of the P2PFA. The industry trade body has now taken steps to back up the views of its member platforms by conducting a survey of over 4,500 peer-to-peer investors in order to gauge their opinions on the government consultation. A summary of the results:

  • 74% of respondents like the idea of keeping their peer-to-peer lending in a separate lending ISA.
  • 81% agree that P2P lending has different characteristics to investments in a Stocks and Shares ISA.
  • 81% again agree that a lending ISA will introduce a greater breadth of choice to the investments market.
  • If the third ISA type is introduced by government, 62% of respondents will definitely invest in the product.

An apparent swell of support for the third ISA type, then – and music to the ears of the P2PFA and its members. Christine Farnish, Chair of the P2PFA, weighed in on the results:

“Consumers want to see greater choice across the ISA market and the creation of a Lending ISA is a positive and necessary step. Peer-to-peer lenders and consumers fully back the decisions that have already been made by the Government, but it is quite clear that they do not want to see peer-to-peer lending shoehorned into either the cash or the stocks and shares category of ISA because it is different in kind.”

But of course, the industry is not unanimous in its position on ISAs. Secured lending outfit Wellesley & Co., which departed the P2PFA a few months ago over differences of opinion, recently jumped ahead of the government consultation by structuring a Stocks and Shares ISA-eligible, asset-backed bond listing – the first instrument of its kind. 

The true value of the P2P ISA, however it ought to be structured, is that it will likely pull large sums of “new” money into the peer-to-peer sector. The opinion of existing peer-to-peer investors serves as a useful steer, but the position of the wider public – the bulk of whom are not currently engaged in the sector – also needs to be taken into account. 

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