IFISA inflows set to surge despite new regulatory restrictions
Innovative Finance ISA (IFISA) inflows are expected to accelerate as this ISA season approaches, despite the new marketing restrictions imposed by the City regulator.
An informal straw poll conducted by Peer2Peer Finance News found that peer-to-peer lending platforms are unanimously optimistic about the upcoming ISA season, with inflows already starting to pick up.
“We have had over £6m invested in our IFISA so far,” said Frazer Fearnhead, chief executive of The House Crowd.
“With the ISA season coming up we are focused on attracting ISA investment into our new auto-invest products and have a target of attracting an additional £6m before 5 April.”
Fearnhead expects approximately 40 per cent of this new IFISA money to come from new users, with the remaining 60 per cent coming from transfers.
“We do expect to see a rise in IFISA inflows this year,” said chief executive Stuart Law. “Our IFISA inflows have rallied strongly.
“There is no impact expected from the regulations in our company’s case.”
Last year, RateSetter’s IFISA attracted £175m, making it the most popular IFISA provider in the UK. A RateSetter spokesperson said that the platform will be “putting our best foot forward in ISA season” and is looking forward to marketing to new customers in line with the new Financial Conduct Authority regulations.
Under the new rules, platforms cannot suggest that IFISA investments are in any way similar to cash savings accounts and new customers must pass an appropriateness test before investing. However, some industry insiders have pointed out that these restrictions will have little bearing on their ability to attract new investors, as ISA users have been frustrated by stock market volatility and the low interest rates offered by cash ISA accounts.
“Cash ISA accounts are so poor, banks don’t make as much of an effort to sell them now,” Bruce Davis, co-founder of Abundance, said. “ISAs aren’t pushed in the same way they used to be.”
- February 21, 2020