The Financial Conduct Authority (FCA) said it has seen evidence that IFISAs are being promoted alongside cash ISAs and has urged consumers to "carefully consider where their money is being invested" before purchasing the "high risk" product."Investments held in IFISAs are high-risk with the money ultimately being invested in products like mini-bonds or P2P investments," the FCA said on Monday."These types of investments may not be protected by the Financial Service Compensation Scheme so customers may lose the money invested or find it hard to get back."Anyone considering investing in an IFISA should carefully consider where their money is being invested before purchasing an IFISA."The regulator has previously flagged concerns over the way that P2P is marketed to consumers and has proposed categorisation or appropriateness tests, potentially limiting the sector to sophisticated investors.P2P lending platforms have criticised the FCA's comments, arguing it does not differentiate between the various types of peer-to-peer lending, some of which are less risky than investing in stock markets.Frazer Fearnhead is founder and chief executive at the House Crowd, a property-focused P2P lender. He said restricting P2P products to sophisticated investors is not the answer."Restricting to sophisticated investors would just kill the industry – it is meant to give the general public access to the sorts of returns and investments that only high-net-worth people could previously access," he told Peer2Peer Finance News."If you rob them of that, what are they left with? They'll never stand a chance to build up a nest egg for retirement because they are left with things like cash ISAs which don't even beat inflation."He said the FCA's warning is a "knee-jerk reaction" and it is unfairly lumping high-risk products in with lower-risk ones.
8% Yield Loan LatestThe latest loan from property-backed Seascape (is proving popular. This A-rated tranche yields 8 per cent gross, at a fixed rate for five years. It is now more than 45 per cent subscribed. As is the case with earlier tranches of credit, we have used our best efforts to ensure the truth of the assertions made, but cannot warrant their absolute accuracy. Fuller detail is available to logged-in members.
A Process Guide To Innovative Finance ISA InvestmentMoney&Co. lenders have achieved an average return of more than 8 per cent gross (before we deduct our one per cent fee). That figure is the result of almost £15 million of loans facilitated on the site, as we bring individuals looking for a good return on capital together with carefully vetted small companies seeking funds for growth. Bear in mind that lenders' capital is at risk. Read warnings on site before committing capital.All loans on site are eligible to be held in a Money&Co. Innovative Finance Individual Savings Account (IFISA), up to the annual ISA limit of £20,000. Such loans offer lenders tax-free income. Our offering is an Innovative Finance ISA (IFISA) that can hold the peer-to-peer (P2P) business loans that Money&Co. facilitates. For the purposes of this article, the terms ISA and IFISA are interchangeable.So here's our guide to the process:
Risk: Security, Access, YieldDo consider not just the return, but the security and the ease of access to your investment. We write regularly about these three key factors. Here's one of several earlier articles on security, access and yield.