Financial Conduct Authority Considers Commission Ban For P2P ISAs

The government is planning to allow peer to peer lending agreements within ISAs from April 2016. Therefore, advising on these products will turn out to be a regulated activity from the said date. Here’s a link to the FCA guidance press release.

The Financial Conduct Authority stated in a discussion paper that was published last month that it is considering whether to ban commission for peer-to-peer Individual Savings Account advice.

If commission is banned, the payment of commission to platforms such as those run by SIPP (Self Invested Personal Pension) operators would also be prevented.

FCA is considering whether its regulations on the suitability of counsel should apply to companies guiding and giving advice on the products.

However, the FCA stated it would not be proportionate to make advice on peer-to-peer lending matter to all the requirements of the RDR. According to the regulator, it would not be suitable for independent advice firms to consider peer-to-peer investments.

Moreover, the FCA was asking for opinions on whether investors should be informed on: the tax consequences if the P2P loan is not paid back; the tax consequences of withdrawing a P2P agreement from an Individual Savings Account; and the method for switching ISA manager. And by December 31, it will then consult on any changes.

Watch this space!