With a week to go, the introduction of the Innovative Finance ISA (IFISA) is proceeding with all the frenzy of a glacier sliding down a mountain. We've noticed some good news, some constructive criticism and some useful advice for investor thinking about dipping their toe in the water.
The good news is that two platforms have had an IFISA product approved. Cornwall's Crowd2Fund had an IFISA product approved, and so did Abundance. The Abundance IFISA allows you you to invest in renewable energy debentures
It's worth five minutes of any investor's time reading the interview with Abundance founder Bruce Davis just for the insight into thorough and diligent the approval process has been. Platforms have done a lot of work to create transparent, moderately risky products that qualify for a tax break.
The advisers' website FTAdviser congratulated Abundance, but for some reason decided to repeat it's warning that "some advisers [are] shunning the new offering, which is not covered by the Finanical Services Compensation Scheme."
It really is embarrasing that the adviser community is still struggling to get its head around two different risks: on the one hand, a bank going bankrupt (which is what FSCS protects), on the other, a borrower getting behind on their payments. As Crowd2Fund say - you don't benefit from FSCS, because it's not a savings product. It's as simple as that.
If you want a thoughtful read about the pros and cons of IFISA investing, we commend "Seven questions to ask before you open an IFISA" by Orca Money.
If you're an adviser and need to know the rules for IFISAs, you can download them in PDF format from the APPC website (that's the Association of Professional Compliance Consultants.)
Overall, we think that choice in IFISA products is going to improve in April and May, so unless you really have to put your money away right now, we suggest you wait a few more weeeks. You can only invest in one IFISA per tax year, so it's worth waiting for the right one.