An expert adviser to the UK’s peer-to-peer (P2P) lender sector has written an open letter to HMRC calling for amendments to draft legislation concerning the new Innovative Finance ISA (IFISA).

Writing for AltFi, Goji Managing Director Jake Wombwell-Povey criticised “legislative handcuffs” contained in existing proposals. These are the stipulation that investors may only contribute via a single P2P provider, thereby preventing investment across multiple platforms under one wrapper, and the insistence that investors may not use their existing ISA managers for investing in an IFISA and must instead invest directly through P2P platforms.

Wombwell-Povey, who is a supporter of the new IFISA, writes: “Only allowing individual access to the IFISA through a single P2P provider will stifle investor uptake. It will limit choice and an investor’s ability to diversify.

“The legislation must be amended to enable new distribution channels such as investment platforms, many of whom are already tried and tested ISA managers. This will open up the industry, guaranteeing the product's success and uptake.”

P2P investment platforms are a recent development in the alternative finance sector. Unlike P2P lenders, they do not operate lending services but instead make loans available that can then be entered into through different P2P lending platforms.

Including these investment platforms, Wombwell-Povey argues, will allow consumers to spread their investment risk across a carefully chosen IFISA portfolio. The inclusion would also foster further innovation across the P2P lending sector as investors will spread their investments over a wide range of platforms, investing greater amounts more easily “to the benefit of the industry and the borrowers it serves.”