Earlier this year in March, Chancellor George Osborne announced that investors would soon have access to peer to peer assets via their individual savings accounts (ISAs). ISA’s are similar to US 401K accounts where individuals may save money on a tax fee basis to prepare for their future retirement. This announcement was seen as a huge boon for the fast growing P2P industry, creating a new segment that would certainly increase capital flow to these lending platforms as savers seek higher returns.
The inclusion of P2P assets would probably drive a sharp acceleration in overall P2P lending with at least one industry observer, Liberum, envisioning a huge 48-times growth in the P2P market in the UK over the next 5-10 years. The estimated increase in the new market was placed at approximately going from £930 million to £45 billion.
Now, as being reported in FT.com, a new consultation will be launched to clarify the governments approach. Expected to be released in July, apparently the “realities” of incorporating P2P assets into the accounts are “proving complex”. Several options are being discussed one of them being limited selection to a vehicle that only invests in P2P lending.
HM Treasury was quoted stating; “The government will consult informally on allowing peer to peer loans within ISA’s before launching a public consultation later this year”.
As more investors and borrowers shift to P2P platforms, generating more efficient market based transactions, demand should naturally increase as returns are more competitive than traditional bank offerings for savers. The government sees this as an opportunity to give ISA savers a greater choice while encouraging more participation.
