Lending Works Receives ISA Approval
Lending Works is the first major peer to peer lending platform to receive full authorisation from the FCA to launch its Innovative Finance ISA product. The platform has commented that its lenders can expect to receive access to this new ISA “within weeks”, and other large lending platforms are expected to follow shortly after. As it stands, there are 85 other ISA applications currently in progress with the FCA, however Lending Works is the first large lender to receive authorisation – marking a significant step forward for individual investors who engage in peer to peer lending.
The IFISA officially launched on April 6th 2016, however FCA regulation heavily slowed its progress and so far only a handful of small-sized lenders have been able to offer the new ISA. Despite these regulatory delays, HMRC published draft legislation in August 2016 to expand the ‘coverage’ of the IFISA to include bonds and debentures.
Lending Works may have been able to receive FCA authorisation more quickly than others due to its simple interest structure – currently lenders can receive 4.2% and 5.2% interest on loans lent for 3 years or 5 years respectively. On the other hand, platforms such as Funding Circle have a broad range of interest rates and repayment terms, as well as ‘loan parts‘ that can be traded between individuals.
Peer to peer lending is not protected by the Financial Services Compensation Scheme, and an IFISA cannot be likened to a Cash ISA. For information on the risks of peer to peer lending, please read this article.
Updated: Tuesday, December 4th, 2018