Hi Whammy,
I’m using HISM and ISM actors in my current project and havent had any issues with collision at all. You mentioned that the mesh being instanced already has collision - what about the actor that holds the ISM? Did you check the collision setting on the actor spawning the ISM?
Things to check:
Drag the actual mesh to your level and check collision first (not instanced, just the actual mesh to your scene)
Change the mesh on your ISM actor and see if something as simple as a cube has collision
Make sure collision for the mesh and ISM actor is on “Block All” to see if collision is being triggered
If nothing works, post your Blueprint and mesh setup for us to take a look 