With UK interest rates currently at record lows and the continuing uncertain backdrop for investors, the Innovative Finance ISA (IFISA) adds another string to the ISA portfolio options. The IFISA allows access to alternative finance returns in the form of loans or debt instruments, facilitated directly between investors/lenders and borrowers by regulated platform providers. In short – potentially higher interest rate returns, sheltered from tax, in return for more risk. The trouble is that providers are struggling with limited supply, outstripped by growing demand. As such, many new investors could miss out, though, with the spectre of rising interest rates pushing up default rates, there are dangers for those exposed to the highest risk peer to peer products. As ever independent advice should be sought if you are considering this alternative ISA option.
