"At Funding Circle, we rigorously prepare for changes in economic conditions," said the firm's chief risk officer Jerome Le Luel in a December 2018 update. "Part of this is to regularly stress test the loans in each of our markets. Although every recession is different, the results show that even in severe economic conditions investors should still be expected to experience positive returns."Daniel Meere, managing director of consulting firm Axis Corporate, said that the stricter stress tests have been "both useful and necessary", as they give an indication of how institutions would respond to 'black swan' events, and they look back over a long timescale.He said most of the questions stress tests pose are reasonable as they help assess good governance and responsible practices. He noted these tests are increasingly being applied at the consumer level, to both secured and unsecured lending."
That's great news - if it's accurate. Some commentators have found the reporting and transparency of some P2P platforms' loan books to be, well... sub-optimal. We hope everything is as rosy as reported, but we reserve judgement.
A Process Guide To Innovative Finance ISA InvestmentMoney&Co. lenders have achieved an average return of more than 8 per cent gross (before we deduct our one per cent fee). That figure is the result of almost £15 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:
Risk: Security, Access, YieldDo 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.