IFISA is On The Way - with Overdue Diligence

If you're excited about the imminent arrival of the Innovative Finance ISA (IFISA), we have some good news and some bad news. 

The good news is, UK taxpayers will be able to invest funds in peer-to-peer lending, through a tax free ISA product , in the tax year 2016 - 17.

Crowd on a railway platform, waiting for a train.

The bad news is, you are unlikely to have a lot of choice on Wednesday 6th April, the way things are going.

 The Financial Conduct Authority (FCA) has written to 31 lenders to inform them they may have to wait a bit longer before they can launch their IFISAs. This news comes via  FT Alphaville, whose reporter Kadhim Shubber says he has seen a copy of the letter.

regulatory tweaks have made them unable to make authorisation decisions 

It's not the end of the world, but we can imagine that peer-to-peer platforms will be very angry. They are likely to have bought advertising campaigns, on the expectation that their products would be licensed and available for sale at the start of the new tax year.

The platforms will be able to say "sorry, you can't invest today, but please come back in a while." But because of the way that marketing works, and purchase decisions are made, there will be disappointment, and platforms will feel that money has ben wasted, and customers frustrated.

The reason for the delay, according to Mr Shubber's report, is because of "regulatory tweaks that have made them 'unable to make authorisation decisions,' ” We infer from this that the FCA is unable to make decisions because its people are still working through the details with officials from the Treasury.  We invite you to read the full article on FT Alphaville for more information.   

We're not sure why the FCA has been taken by surprise on this matter. As Money&Co. reported last month, the regulator knows how many platforms are operating under an interim permission, which gives them a very reliable number of potential applicants they would need to review and approve. 

THe FCA has been a very far-sighted, friendly, and innovative regulator in the two years since it took over responsibility for the peer-to-peer lending sector, but it does need to be better resourced.