HM Treasury has launched a consultation on how to make P2P crowdfunding loans ISA-qualifying investments. The decision has already been taken to make P2P loans eligible for ISA inclusion, this consultation is about the mechanics of achieving that. Key matters of interest for P2P platforms:
- Will P2P platforms themselves take the role of ISA plan manager, or will more traditional investment platforms be more prevalent?
- If traditional ISA plan managers hold P2P loans as agent for investors, this may result in loans being made by way of business, which could in turn trigger consumer credit implications for the underlying loan contracts.
- P2P platforms are expected to ensure a regular market in loan transfers in order for their loans to be eligible, but what legislative test will be imposed on them to deliver this high level aspiration?
- Gaining ISA status will break down the distinction between P2P loans and securities, so advising on P2P loans will become regulated in the same way as advising on securities (but auto-lend functions are not intended to be captured by this).
- HMT’s agenda places increased significance on the FCA’s high level requirements to have living will arrangements in place, which may lead to established ISA Plan Managers becoming integral to those living will arrangements.
The consultation closes on 12 December.