In April 2016, the Government will introduce the Innovative Finance ISA (IFISA). This will allow for peer-to-peer (P2P) agreements to be included within an ISA tax wrapper. Additionally, the Government intends to make advising on P2P agreements a regulated activity.
The FCA has now published Discussion Paper 15/6: Possible FCA Handbook changes to reflect the introduction of the Innovative Finance ISA and the regulated activity of advising on peer-to-peer agreements (DP15/6).
In DP15/6 the FCA considers that it may wish to take the following steps in connection with the introduction of the IFISA:
- introduce guidance on how the disclosure rules in the Conduct of Business sourcebook (COBs) apply to firms in relation to investments in P2P agreements held in an IFISA wrapper; and
- introduce guidance on the disclosures which should be made to prospective investors in P2P agreements held in an IFISA wrapper (including in relation to the application of client money rules), when facilitated on platforms operated by firms with an interim permission.
With the Government intending to amend the Regulated Activities Order so that providing advice on P2P agreements is a regulated activity the FCA considers that it may consult on applying the suitability rules. It may also consult on taking steps to ensure that such advice is not at risk of being influenced by the payment of commission by introducing a ban on the payment or receipt of commission in relation to investment in P2P agreements.
The FCA also states that it has undertaken an equality impact assessment and considers that loan-based crowdfunding platforms generally, and access to them via IFISAs, may carry particular risks for some people with protected characteristics under the Equalities Act 2010. To mitigate the risks the FCA proposes to focus in particular on the quality of firms’ disclosure, including financial promotions, to ensure that risks are adequately disclosed.
The deadline for comments on DP15/6 is 31 December 2015.
View The FCA asks for views on changes it plans to make its rules and guidance as a result of the introduction of the Innovative Finance ISA and the regulated activity of advising on peer-to-peer agreements, 12 November 2015