Investing in Innovative Finance ISAs

9 April 2019 Alistair MacDougallCompliance

The FCA published a warning on 1 April about how some firms are promoting Innovative Finance ISAs (IFISAs). The FCA has seen evidence that IFISAs are being promoted alongside cash ISAs.

This is problematic because investments held in IFISAs are generally high-risk. The money is ultimately invested in products like mini-bonds or peer-to-peer investments.

In addition, 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 it back because of liquidity issues.

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Our View

Anyone considering investing in an IFISA should carefully consider where their money is being invested before purchasing an IFISA. This includes advisers promoting IFISAs, who need to explain the nature of the risks involved very clearly.