Should investors be allowed to hold P2P loans in NISAs ? The Peer to Peer Finance Association (P2PFA) has published a survey which shows savers "overwhelmingly" believe they should, and that peer-to-peer lending should be separated from traditional cash or stocks and shares.
New Individual Savings Accounts (NISAs) are tax-free savings account in which UK savers can invest up to £15,000 a year. in cash, equities, or a mixture. The new rules for ISAs came in force on 1st July 2014. ISAs have existed since 1999.
The Chancellor promised to look at making P2P investments eligible for NISAs in his autumn statement and an HM Treasury NISA consultation was launched on October 17th.
Opinions among peer-to-peer lenders vary. Nicola Horlick of Money&Co has argued that P2P lending is a new asset class, distinct from both savings accounts and shares; she thinks dedicated P2P NISAs are the way forward. Others have suggested that P2P loans could become intermediated and sold using 'wrappers' that offer savers a return without them holding P2P loans directly. Both Wellesley and Co and the UK Bond Network launched 'wrapper' products in the last few weeks which are completely legal in NISAs today.
The P2PFA, which represents a number of lending platforms, polled over 4,500 individual lenders through its member platforms to ask them about their preferences. The verdict appears strongly in favour of separate NISAs for P2P assets.
- 95 per cent welcome the UK Government’s decision to include peer-to-peer lending in the NISA framework;
- 81 per cent say that peer-to-peer lending has different characteristics to investments in a Stocks and Shares ISA;
- 74 per cent say they like the idea of keeping their peer-to-peer lending in a separate NISA;
- 81 per cent agree that a lending ISA will introduce more choice across the investments market;
- 62 per cent will definitely invest in a lending ISA, If the Government introduces them.
Bear in mind that these responses are from people who have already invested in a P2P lending product through one of the P2PFAs member companies.
The Treasury consultation closed on the 12th December, and the goverment is still analysing the feedback. The P2PFA survey doesn't count as feedback, officially. We'll be very interesting to see what the published feedback says, and what the government decides to do next.