A group of some of Europe’s largest FinTechs has joined forces to create and launch a new non-profit organisation, the European Fintech Association (EFA), according to our friends at AltFi.
First, it will be interesting to see how the new group fits in with the ground already covered by the European Crowdfunding Network. Crowdfunding is a wider term that FinTech, and is less fashionable than it used to be.
Second, we look at this pan-European initiative with a combination of admiration and sadness. The idea of developing common standards and promoting awareness of the FinTech sector across Europe is a good one. But how will it work for UK FinTechs after Brexit – quite possibly a “no-deal” version – has finally occurred at the end of this year? Time will tell.
EFA’s main objective is to help create a single financial market within the EU, removing cross-border barriers for financial services.
The founding members of the EFA are savings marketplace Raisin, software-as-a-service provider Finleap, alternative lender Funding Circle, wealth management platform Moneyfarm, digital bank N26 and money transfer service TransferWise.
Marc Roberts, President of the EFA’s board and chief counsel for Raisin, said: “By launching the Brussels-based association, EFA will be able to support the voice of FinTechs in Europe by encouraging proportionate and smart regulation that will support European financial innovation while taking consumer protection into account.”
“Digitalization is an opportunity for all to build a better functioning market for financial services. We believe that Europe can be a leading hub and kick-start for global growth of FinTech companies.”
The creation of the group follows the European Commission’s commitment to introducing a new digital finance strategy.
Historical Performance And IFISA Process Guide
That figure is the result of over £21 million of loans facilitated on the site, as we bring individuals looking for a good return on capital together with carefully vetted small companies seeking funds for growth. Bear in mind that lenders’ capital is at risk. Read warnings on site before committing capital.
All loans on site are eligible to be held in a Money&Co. Innovative Finance Individual Savings Account (IFISA), up to the annual ISA limit of £20,000. Such loans offer lenders tax-free income. Our offering is an Innovative Finance ISA (IFISA) that can hold the peer-to-peer (P2P) business loans that Money&Co. facilitates. For the purposes of this article, the terms ISA and IFISA are interchangeable.
So here’s our guide to the process:
The ISA allowance for 2019/20 is unchanged from last tax year at £20,000, allowing a married couple to put £40,000 into a tax-free environment. Over three years, an investment of this scale in two Money&Co. Innovative Finance ISAs would generate £8,400 of income completely free of tax. We’re assuming a 7 per cent return, net of charges and free of tax here.
Once you have made your initial commitment, you might then consider diversifying – buying a spread of loans. To do this, you can go into the “loans for sale” market. All loans bought in this market also qualify for IFISA tax benefits.
Risk: Security, Access, Yield
Do consider not just the return, but the security and the ease of access to your investment. We write regularly about these three key factors. Here’s one of several earlier articles on security, access and yield.