Following November’s discussion paper, the Financial Conduct Authority (FCA) has updated its handbook to take account of the new Innovative Finance ISA (IFISA), which is due to appear in the alternative finance space in April.

The update confirms that the payment or receipt of commission by firms in relation to personal recommendations regarding advice on peer-to-peer (P2P) agreements will remain prohibited. It also provides new guidance on current disclosure rules to establish what information companies should disclose in relation to IFISAs.

The revised rulebook additionally confirms that consumers who receive advice on P2P agreements will be able to access the Financial Services Compensation Scheme (FSCS) and the ombudsman service just as they would if receiving regulated advice on other investments.

Currently, the provision of advice to prospective investors about the advantages of investing in P2P agreements via P2P lender platforms is an unregulated activity. The FCA has confirmed that, following amendments to the legislation, only authorised persons with the requisite permissions will be permitted to provide regulated advice on P2P agreements.

Firms will be obliged to clarify to potential investors where any financial promotions they are offering do not constitute regulated advice. This is to ensure consumers are made fully aware whether they are receiving regulated or unregulated advice.

Firms describing themselves as independent, however, will not be required to consider P2P agreements when recommending retail investment opportunities to retail investors.

The update concluded that “with the sector still at an early stage of development, we do not consider it appropriate to make this a requirement at this time.”