There are signs, early ones as yet, that the young sub-sector of crowdfunding inhabited by Money&Co. is growing up.
Once upon a time, crowdfunding was a vaguely trendy, catch-all term for anything from start-ups seeking equity investment, to group property investment, to a charity raise and beyond. One fellow in the United States sought money from the crowd to help with the catering at a neighbourhood barbeque. He ended up with thousands of dollars, all pledged for the noble purpose of making potato salad.
Small wonder, then, that crowdfunding has a somewhat flaky reputation in some quarters. Want to buy a wing-nut of a Formula 1 car at a fantastically inflated price? Or send a strand of hair to the moon? Then Crowdfunding's your vehicle.
Ignorance isn't just confined to the general public (and, yes, there's an irony in the notion that the crowd doesn't really know what crowdfunding is). The exotic scheme to send hair to the moon prompted an earnest young BBC researcher to call a senior member of the Money&Co. team for comment. We directed him to one of "crowdfunding's" self-publicists, who was only too happy to opine.
And so it is that we welcome a recent move from a leading industry body, the Peer-to-Peer Finance Association (the P2PFA - which Money&Co. is currently talking to about membership). The P2PFA has called on the UK Government to create "an entirely new category of ISA or "Lending ISA" as opposed to directing P2P assets into an existing ISA category," as reported by the intelligence platform, crowdfundinsider.com (a usually reliable specialist media outlet, even if it share the common fault of alluding to ISAs as opposed to New Individual Savings Accounts [NISAs]).
Christine Farnish, independent chair of the P2PFA is reported as saying: "We are looking forward to seeing the Government's response in the New Year and hope it brings greater clarity to how savers can use Peer-to-Peer lending as part of their ISA wrapper."
"We strongly urge Government to set up a new category of ISA – a Lending ISA – rather than try and shoe horn peer-to-peer lending into either a cash or a stocks and shares ISA.
"In his recent Autumn Statement, Chancellor George Osborne endorsed our industry and I hope the ISA reforms will allow many more to benefit from our sector. Eventual inclusion in the ISA wrapper will enable millions of people to benefit from more competitive returns on their money. Using a P2PFA-registered member they will be able to do this in a way that is clear, fair and not misleading."
Names are important. The NISA/ISA confusion is an irritant that will go away sooner or later. And as irritants go, it's minor - whether the new name is used or not, we all understand the topic in hand.
Lumping together P2P business lending – the serious and worthwhile process of bringing people and businesses together – with risky equity raises, charity drives and fads does no-one any favours.
As the industry matures, our sector will become clearly demarcated as P2P business lending, a crowdfunding subset. It will have its own products, regulatory standards and identity. And the other stuff, well quite o lot of it anyway, can be sent to the moon.