First person: The innovation game

Uptake on the new Innovative Finance ISA (IFISA) has been slow, but that’s not to say its future isn’t bright
by Andrew Davis

When stats for the first year of subscriptions to the new Innovative Finance ISA (IFISA) were published last summer, there was nothing in them to suggest the mainstream investment sector ought to pay attention. Just 2,000 of the new ISAs were funded in the first 12 months, the subscriptions totalling £17m. To put that in context, over £22.3bn flowed into stocks and shares ISAs in 2016–2017, some 2.6 million of which received subscriptions. 

Although the 2017–2018 IFISA numbers will be larger, they will still look tiny next to the established types of ISA, reinforcing the temptation among most advisers and asset managers to write off IFISAs – and the peer-to-peer loans and debt-based securities they contain – as a DIY investor fad that the sector can afford to ignore. It’s easy to understand this view. Beyond a core of more adventurous DIY investors, public awareness of these products is extremely limited. Research, exclusively commissioned by AltFI, finds that less than one in four people have even heard of IFISAs (although 60% are aware of P2P lending). Besides, new and unorthodox investments like these are tricky for advisers to handle even if they want to. Suitability and compliance are headaches, and professional indemnity insurance may well not extend to areas like P2P lending.
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Published: 07 Mar 2018
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