Financial services company Zopa announced today that it will launch its Innovative Finance ISAs (IFISA) in June.
Pending final approval from HMRC, IFISA will be available from 15th June with target returns of up to 6.1%.
As Zopa expects investing volumes to be high, the company is giving existing investors priority access ahead of new customers, where existing investors are those customers who have already signed up as an investor today.
In addition to IFISA, on 15th June Zopa will also launch its newest peer-to-peer investment product: Zopa Core. Core will lend in risk markets A*-C and will, by December 2017, replace Access and Classic.
Core will offer initial target returns of 3.9%, and will not be covered by the Safeguard fund. Classic and Access will not be available for investors currently on the waiting list or future investors, however current investors with loans in Access or Classic can continue to lend through these products until 1st December, 2017 when they will be retired.
From launch, investors will be able to send Access and / or Classic repayments into Core, and add new funds. Core, like Plus, will have a minimum investment of £1,000 to diversify your risk: this will be waived for existing customers moving their repayments across, but it’s important to remember that those customers with a waived minimum will have more than 1% exposure to each borrower and will have a higher chance of losing money.
Zopa is retiring Access and Classic from 1st December 2017, which means the company will no longer be originating loans with Safeguard coverage after this date. All existing Safeguarded loans will continue to receive coverage (subject to there being sufficient funds in the trust) until December 1st, 2022, by which time all Safeguarded loans will have matured.
Zopa initially introduced Safeguard in 2013 to deal with a tax anomaly that unfairly penalised peer-to-peer lenders. The fund was designed to ensure that investors only paid taxes on the net income they received from Zopa borrowers. In 2015 the tax laws were updated enabling investors to claim for relief on losses from bad debt. As a result, the primary reason for Safeguard was removed.
Last year, based on customer demand, Zopa introduced Zopa Plus, its current product without Safeguard coverage.