Conservative Risk Management Is Way Forward For P2P

Steady as she goes… The peer-to-peer (P2P) sub-sector of alternative finance has suffered some reverses recently. We offer an excerpt from the latest news report from our friends at AltFi, involving a UK fund investing in a troubled French venture, below.

Our take on all this is simple: improperly managed risky ventures will fail (and we make here no specific criticism of the companies in the news story excerpt below). It’s easily avoided by deploying conservatively managed risk analysis. See two recent blogs on this topic:


P2P Global Investments has updated on its numbers for the month of May showing the investment trust had to write down a further investment in Urica, first signalled last year.

May’s returns were impacted by a one-off write down, 0.25 per cent of the total net asset value (NAV) of the fund as receivables relating to the legacy exposure to URICA Europe. Aside from the URICA writedown, the monthly return was 0.53 per cent.

Analysts at Liberum said the hit means further delay to the re-establishment of its target dividend 

“The URICA Europe writedown is undoubtedly frustrating and we believe this may delay the potential dividend increase by a further quarter to Q3. The fund’s NAV total return in the two months to May is 7p (0.7 per cent) and we therefore would expect the dividend to remain at 12p for Q2.” 

Urica, a French invoice financing platform, when into liquidation one year ago due to major fraud. P2P GI had initially lost its equity stake in the platform but had boped to get back loan assets it also held.

Loan Latest And IFISA Process Guide

  • Money&Co. lenders have achieved an average return of more than 8 per cent gross (before we deduct our one per cent fee). New loans are expected to land on site soon.

That figure is the result of over £17 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.

  • Money&Co. has been lending for over 5 years and has only had one bad debt so far, representing a bad debt rate of 0.04 per cent per annum.

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:

  • Step 1: Register as a lender. Go to the login page, and go through the process that the law requires us to effect. This means we have to do basic checks on you to comply with money-laundering and other security requirements.
  • Step 2: Put money into your account. This is best done by electronic transfer. We can also process paper cheques drawn in favour of Denmark Square Limited, the parent company of Money&Co.
  • Step 3: Buy loans in the loan market. Once you’ve put cash in your account it will sit there – and it won’t earn interest until you’ve bought a piece of a loan. It’s this final step that requires lenders and IFISA investors to be pro-active. Just choose some loans – all loans on the Money&Co. site can be held in an IFISA – and your money will start earning tax-free interest.

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.


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Disclaimer: Money&Co.™ is the trading name of Denmark Square Limited, Company Number 08561817, registered in England & Wales, authorised and regulated by the Financial Conduct Authority (FCA). The company is identified on the Financial Services Register under Reference Number 727325. The registered office is 58 Glentham Road, Barnes, London, SW13 9JJ where the register of Directors may be inspected. Denmark Square Limited (ISA manager reference number Z1932) manages the Money&Co. Innovative Finance ISA.