Are IFISAs safe?

The IFISA is an investment product, meaning they have the ability to offer higher potential returns than traditional savings methods - such as the Cash ISA - but also come with a higher level of risk. The risk profile of an IFISA is typically medium–high, but the exact risks of each depend on a number of factors.


The IFISA typically offers tax free target returns of between 4% and 8% per annum, making them an attractive investment opportunity for experienced investors in particular.

Some platforms may offer potential rates in excess of 10%, but investors should excercise additional caution when faced with these, as higher rates usually equate to higher risks.

It's important to be aware that returns from an IFISA are targeted - they're an investment product, meaning your capital is at risk and returns are not guaranteed.

A borrower defaulting on their loans is the biggest risk that an investor faces when investing into an IFISA. All IFISA providers should have processes in place to minimise this risk to the best of their ability, and they should have a plan of action to put in place if a default was to occur. 

Therefore, it's advisable that you conduct thorough research into your IFISA provider before investing - taking into consideration their track record, and how they assess borrowers. 

Asset-backed investment opportunities - where your investment could have a first-ranking (or equal first-ranking security on assets of the borrowers - can provide an additional layer of security. An example of an asset-backed investment are property bonds, where you investment is generally secured on assets such as land or property. 

However, even if your IFISA is asset-backed, this does not render it completely free of risk. In the event of an economic downturn, asset-backed security does not guarantee the return of your capital.

Read more:download the IFISA guide

In regards to risk, the IFISA usually sits in between the Cash ISA and the Stocks and Shares ISA. 

Cash ISAs are a savings product, meaning capital is not at risk - so their risk profile is low. However, to match their low risk profile, the returns offered by a Cash ISA are also low - typically below 2%. 

Though the Stocks and Shares ISA can often offer higher potential returns than an IFISA (typically 4% and upwards), they also possess more volatility. This is because the IFISA -unlike the Stocks and Shares ISA - is not subject to the fluctuations of the stock market. 

Below is an overview of the risk features of an IFISA, Cash ISA and Stocks and Shares ISA.

Risk profile
Covered by the FSCS?
Yes - up to "£85,000" in the event of provider failure
Yes - up to "£85,000" in the event of provider failure but not in the event of poorly performing investments
Asset-backed options offer additional security

Less volatility than a Stocks and Shares ISA

Higher target returns than a Cash ISA
Savings product - capital not at risk
Often higher target returns than both a Cash ISA and an IFISA



CARLTON Bonds are an IFISA provider specialising in fixed term property bonds.

Against a backdrop of low interest rates and a volatile stock market, the IFISA can provide an attractive investment opportunity for experienced investors. 

With the ability to hold peer-to-peer loans and debt-based securities, IFISA investments have the potential to generate higher rates of return than more traditional investment routes for investors with a greater appetite for risk.

To find out more, download our free IFISA guide.

The Innovative Finance ISA Guide