The Financial Conduct Authority (FCA) has been taking a long, hard look at the peer-to-peer (P2P) lending sector in the light of recent high-profile failures, such as that of Lendy. The latest compliance moves from the FCA have been greeted in tones of shock and horror (see below, a report from our friends at P2P Finance News that is rather disapproving, at least). A different way of looking at all this would be to argue that the FCA is borrowing regulatory structure from the asset-management sector, and applying much of it to P2P.
AS IF peer-to-peer lenders didn’t have enough regulations to grapple with, the Financial Conduct Authority (FCA) on Friday announced its final rules for the extension of the Senior Managers and Certification Regime (SMCR).
These regulations will apply to all FCA-regulated firms from December, therefore including most P2P lenders, aiming to increase individual accountability of senior staff in financial services for any regulatory failings.
This could mean a compliance headache for some firms, which may have to change their processes to ensure they are operating in line with the new rules.
Loan Latest And IFISA Process Guide
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.
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.