Innovative finance ISAs will significantly expand the pool of investors participating in peer-to-peer lender platforms, a new study suggests.

A poll by alternative finance lender ThinCats found that 40 percent of the investors surveyed would consider investing in peer-to-peer lending when the new ISA product launches in April next year.

The much-anticipated innovative finance ISA was announced by Chancellor George Osborne in his July budget. The study forecasts that the new product will expand the alternative finance sector by as much as a third, as investors embrace the tax advantages it will offer.

As matters stand, a select number (6 percent) of seasoned investors participate in peer-to-peer lender platforms but thanks to the new ISA their ranks are likely to swell to such an extent that p2p loans will eclipse allocations to equities (28 percent) and fixed rate bonds (24 percent) by a wide margin.

Investors in peer-to-peer lending are generally seeing attractive returns. 51 percent of the survey’s respondents said they were attracted by the prospect of readily seeing where their money goes. The same proportion were driven by the wish to try out this new asset class.

When asked about what prevents them investing in peer-to-peer lending, 44 percent cited the relative youth of the industry, while the same number cited “unproven track record” as a cause for hesitation.

As with all types of investment, some degree of risk is inevitable in peer-to-peer lending. But one platform, Unbolted, has substantially slashed risks for investors by its innovative use of secured asset loans: borrowers place a valuable asset with the platform which is then collateralised as security or the loan.