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ISSUE 54 | MARCH 2021
60pc of IFISA providers closed to retail investors this tax year EXCLUSIVE JUST 40 per cent of Innovative Finance ISA (IFISA) providers are open to retail investment in the current tax year, exclusive data by Peer2Peer Finance News has found. Of the 91 companies which have been authorised by HMRC to offer IFISA products, just 37 are accepting retail money for the 2020/21 tax year. Of these 37 firms, four require a minimum deposit of between £10,000 and £20,000, making them less accessible to the average retail investor. The IFISA launched five years ago and experienced year-on-year growth, but recent anecdotal and quantitative data suggests that the market is now shrinking. By the end of the 2016/17 tax year, 30 firms had received IFISA
manager status, but just seven platforms were able to offer IFISA products to retail investors. During this year, approximately 5,000 IFISA accounts were opened by investors, with a total of £36m invested in the tax wrapper. During the 2017/18 tax year, IFISA approvals increased and 22 platforms were offering IFISAs to their investors. 31,000 taxpayers opened an IFISA during this tax year, invest-
ing more than £290m. The following year 78,714 IFISA accounts had been opened, with at least £711m invested in total. By 2019, 93 firms had been authorised to offer an IFISA, with 71 managers offering IFISA products. And by February 2020, data from The Investing and Saving Alliance found that the total amount invested in the IFISA tax wrapper had reached £1.14bn.
However, since then the IFISA market has diminished. The number of IFISA providers with live IFISA offerings has almost halved over the past year, and numerous platforms have told Peer2Peer Finance News that they expect to see a reduction in their IFISA inflows for the current tax year. This is largely due to the impact of the Covid-19 pandemic, which has created unprecedented uncertainty in the savings and investments market. Four platforms – Zopa, Funding Circle, Octopus Choice and LendingCrowd – have temporarily closed to retail investors due to the pandemic. Funding Circle and LendingCrowd have done this in order to focus on the institutionally-funded coronavirus business interruption loan scheme (CBILS), while Zopa and Octopus Choice have blamed a lack of >> 4