The liberalisation of the financial-services sector continues apace. Will this latest innovation later be decried as a loophole? The protocol of Know Your Client is being tested for elasticity, if not strength and durability here. Our friends at Finextra report:
UK challenger banking app Dozens has enlisted Open Banking outfit Bud to let prospective customers access some of its services without having to fully sign up.
Dozens offers users a slew of budgeting and analytics tools to help them save and invest more efficiently. As it works to attract customers in a crowded market, the firm is working with Bud to give people a taste of its service before they fully commit.
Brits just need to register, complete a basic KYC and connect one or more of their existing accounts with other financial services firms through Bud’s open banking platform. From there, they’ll be able to use Dozens’ tools before – if interested – having to download the firm’s app and complete a full KYC.
Meanwhile, existing customers will be able to connect one or more of their accounts to the Dozens app so they can view tracking and budget insights across all of their money in one place.
Historical Performance And IFISA Process Guide
That figure is the result of over £20 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.