Invest & Fund defends IFISA after call for product to be axed
Invest & Fund has defended the Innovative Finance ISA (IFISA), arguing that it offers investors more diversity for their portfolios, in line with the regulator’s goals to promote fair market competition.
Alan Fletcher, partnership director at the peer-to-peer residential development lending platform, said that the P2P tax wrapper is an “in-demand asset class” and that “it makes no sense to consider removing the investor’s tax-free benefits when the regulators and government mandate is to encourage more responsible retail investment.”
In a blog post on Invest & Fund’s website, Fletcher highlighted the steady returns offered by the IFISA, saying that “P2P outperformed the FTSE 100 from 2018 to 2022 even with the volatility ironed out over a five-year horizon.”
Read more: IFISA returns on the rise
“Looking further across the market, there were huge gains to be made in tech stocks and cryptocurrencies between 2018 to 2022, but investors saw a 33 per cent retracement in the NASDAQ in 2022 and an 81 per cent retracement in Bitcoin in 2022 on a timeframe comparable to the term of a P2P loan, yet in that same period, a P2P loan was perceived by some to be much higher risk than say a stocks and shares ISA, filled with underperforming equities,” he added.
Invest & Fund’s blog post follows a Financial Times interview with AJ Bell co-founder Andy Bell last week, in which he called for IFISAs to be scrapped as part of an overhaul of the ISA market.
“There isn’t any place for P2P loans in an ISA…There needs to be a control on what people do with the money,” he reportedly said.
Fletcher argued that investors must make their own choices, and that a wider breadth of products on the market will result in more capital being invested overall.
Read more: Exclusive: Largest IFISA providers revealed
“This is also in line with the regulator’s goals; the Financial Conduct Authority is committed to promoting fair market competition in the financial services industry, recognising that healthy competition is essential for delivering better outcomes for consumers, driving innovation, and improving the quality of financial services,” he said.
“The popularity of the IFISA is only getting started; it’s a fantastic product that gives P2P investors a better tax deal, and the more we hear those conflicted voices suggesting otherwise, the more confident we are that we are correct in our assessment.”