It is time to listen to financial advisers over P2P ISAs

Outlook

Financial advisers have a rather spotty history. Before the banking industry got really serious about scandal, their fingers were all over some of the worst to hit the financial services industry.

Pension mis-selling, endowment mortgage mis-selling, split-capital investment trusts, and there’s plenty more where that lot came from. Given their financial cost and the reputational damage they caused, you’d expect the advisers remaining in the industry to be alive to future potential pitfalls.

Which brings us to the subject of one of the most popular get rich quick investment fads of the day: peer-to-peer lending. The Yorkshire Building Society has just released the result of a poll showing just 18 per cent of the advisers it surveyed would put their money into such schemes and are concerned that consumers don’t understand the risks.

The Yorkshire also points out last week the Government said it planned to introduce from next April a third type of ISA, the Innovative Finance ISA, allowing for up to £15,240 to be invested tax-free into the P2P sector. Financial advisers are none too keen on such products. Perhaps it’s because they understand the risks. We should listen to them.