Following our collective efforts the UK Government has confirmed co-operative and community benefit society debt securities will be eligible for the new Innovative Finance ISA.
In the past few days our lobbying has prompted government officials to pause in their final drafting of the Innovative Finance ISA regulations to pay particular attention to society eligibility and set things straight. We are very pleased to have clear assurances that for the purposes of the new ISA the term ‘company’ can now be interpreted as including societies.
In summer 2015 HM Treasury consulted explicitly on whether or not to make society debt and equity eligible for the Innovative Finance ISA. We have consistently argued strongly in favour of debt securities being eligible. HM Treasury had never ruled this in or out, but it did omit any reference to society eligibility in its November 2015 consultation response and then referred only to including ‘companies and charities’ in its notes on the draft legislation.
While we don’t have a formal indication of a change in policy, we have been given an assurance that subtle changes to cash ISA rules in 2015 allow for an interpretation of ‘company’ that can be taken to include societies going forward – which is welcome news. [Please note though, this is not legal advice, simply an indication of how the law could be read].
The input to the consultation of so many co-operatives, has made a practical difference.
What happens next?
The ISA legislation will come into force as part of the Autumn Statement in November. It will then be for regulated financial institutions such as banks, building societies and larger credit unions, to explore whether or not developing a co-operative or wider social investment ISA is feasible. There are opportunities here, but they won’t happen overnight.
I am speaking at the International Summit of Co-operatives in October on our sector hopes and activities around co-op and mutual capital.
For now, a future opportunity is here.