Investors wanted it, peer-to-peer lending platforms wanted it, the government believed in it, and the taxman approved it. So how did the Innovative Finance Individual Savings Account (IFISA) get to be the best-kept secret in alternative finance?
Another Crowd is crying into its coffee over reports that as the end of the tax year approaches, nobody knows they can put up to £15,240 into P2P lending, and keep the proceeds tax-free.
"The new Innovative Finance ISA (IFISA) ticks the top three investment priorities but awareness of it remains low, according to research amongst UK investors." we read in Wealth Investor.
"The IFISA aims to meet all these needs but despite this half of those investors questioned said they had never heard of it, and a further third (29 per cent) do know the name but don’t know what it is. In fact, only one in 20 (5 per cent) said they know enough about what an IFISA is to be able to explain it clearly to other people."
Bang, goes our publisher's head on his desk. We wrote a week ago about how ordinary retail investors are nervous about taking risks with their savings, but if only one in 20 of the people who know they want certain boxes ticked before they invest understand a product that ticks all the boxes, our industry has a major problem with investor education.
The Investment Observer offers a different analysis of the same research, but the conclusions are equally depressing.
Karteek Patel, the CEO of Crowdstacker, suggests perhaps the communication problems have been down to the time it has taken for the Financial Conduct Authority (FCA) to authorise peer-to-peer lenders who wanted to offer an IFISA. We have some sympathy with this point of view. A year ago, we were excited, and so were a lot of other people. Then nothing much happened.There was no big marketing spend, because the platforms were waiting on the regulator.
We like Mr Patel's optimism, too: We can see from this new data there is an appetite for it, and that investors want all the things it can offer such as better returns, tax efficiency, transparency, and fixed income.”
Stay tuned for Another Crowd's guide to IFISA Investing. We need to write one. We need to spread the word.