IFISA Guide First Edition
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An Adviser’s Guide
to the Innovative Finance ISA
A comprehensive and accessible resource providing practical and up to date information on the IFISA brought to you by Downing Crowd
What you'll find inside
Practical Guidance
Overview of the types of investments that are IFISA eligible
Case Studies
Real life examples of when and how IFISA can be used and what it can achieve
Key IFISA rules
Detail of the regulation applied to IFISAs, IFISA products and IFISA investors
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The opportunity to earn tax-free returns on Crowd Bonds and P2P loans by investing through an Innovative Finance ISA is the game changer for the industry.
JULIA GROVES, Downing Crowd
Learning objectives
» Recognise the key differences between the IFISA and existing ISAs
» Understand the rules and practicalities that govern the IFISA
» Be familiar with the investment products that are eligible to be held within the IFISA wrapper
» Have examples of how and under what circumstances an IFISA can be used with their clients
» Be aware of the key pros and cons of using the IFISA
» Understanding of how the IFISA interacts with other ISAs
Acknowledgements
A guide like this is rarely the product of one organisation’s efforts and we would like to thank our sponsor Downing Crowd for their input. It would not be possible to produce educational material like this without their generous support and contribution towards the production, printing and distribution of the guide.
Brief Overview
HM Treasury has referred to the IFISA as a way to, “provide ISA holders with greater choice over how to invest and will support the crowdfunding sector to continue to grow as a source of alternative finance for businesses.” The inclusion of additional consumer protections which must be present in the P2P and debt based securities investments that are IFISA eligible can only be reassuring for potential investors. But there are a number of other considerations as well as the everyday practicalities. Our goal with this guide is to give advisers an understanding of these so that they build the confidence to make the best use of the opportunities that the IFISA presents for their clients.
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The perennial search for income can be satisfied with P2P loans or DBS, and their returns – often at 6%+ – are tax-free within the IFISA wrapper, without touching any personal savings allowance; the investment is commonly protected by asset backing or provision funds, uncorrelated to equity markets and, unlike bank savings, individuals can choose what their funds are invested into.
JULIA GROVES, Downing Crowd
Comments on the IFISA Sector
The government believes there is a strong case for allowing crowdfunded debt securities issued by companies to be held in ISAs. This will provide ISA holders with greater choice over how to invest and will support the crowdfunding sector to continue to grow as a source of alternative finance for businesses.
HM Treasury
Investors are broadly aware of the risk and liquidity profile of P2P lending, and their behaviour
does not suggest that they are confusing it with deposit accounts provided by banks.
Oxera
With still more extensions to the ISA regime, ISAs could soon become the “only show in town” for those with modest amounts to save and invest.
David Kilshaw, Ernst&Young