Two New IFISAs Let Investors Fund Lawsuits
Peer to peer (P2P) lenders can now invest in UK-based lawsuits within the tax-free Innovative Finance ISA (IFISA) wrapper.
Two investment platforms are now offering IFISA products to fund lawsuits. AxiaFunder is predicting average tax-free returns of between 20 and 30 per cent for its IFISA investors. These funds will be used to offer litigation finance for claimants who cannot afford to pay their legal fees. Lenders will receive interest on their capital loan, as well as a portion of any winnings.
Meanwhile, the Just ISA – which is backed by Northern Provident Investments – is offering an eight per cent return for lenders who help cover the legal costs of people who are bringing cases against banks or corporates. This IFISA was launched by former Merrill Lynch executive Rob Rutter and comes with a minimum investment threshold of £2,000.
“Investors will ultimately be assisting those who may have been wronged by banks, institutions or individuals,” said Rutter. “A litigation funder funds the legal costs of those who had their lives or businesses ruined by things such as professional negligence – and wish to seek financial redress.”
The Just ISA will accept borrowers on a case-by-case basis. However, it will only help to fund UK-based cases, and the amount lent will depend on how much can be claimed, the likelihood of a win and whether the case will be concluded within 24 months.
By contrast, AxiaFunder’s IFISA has an investment threshold of £500, and the platform will only accept high-value cases which require around £500,000. The platform has already funded its first case, a professional negligence dispute which required a cash injection of £12,720. The platform’s founders have predicted a return of up to 60 per cent for these investors.
Updated: Wednesday, February 13th, 2019