The Financial Conduct Authority comes in for plenty of criticism, but it seems to be ahead of the game when addressing the potential credit disaster that is waiting to happen as the long-term effects of Covid-19 kick in.
The Financial Conduct Authority (FCA) has said guidance on payment deferrals for personal loan borrowers is expected to expire at the end of October but is being kept under review.
Struggling consumer credit borrowers have been allowed to request three-month payment deferrals since July under FCA guidance that is due to end on 31 October.
Updated draft guidance from the City watchdog said borrowers can still apply for the support until the end of October, meaning some deferrals could last until the end of January 2021, but added that the rules on granting payment breaks are still expected to end next month.
“We expect the July guidance to expire on 31 October but we will keep this under review depending on how the wider situation develops,” the FCA said.
The FCA is now consulting on draft guidance to replace the current forbearance rules.
The guidance urges firms to treat customers fairly and ensure payment arrangements are affordable.
It also suggests suspending, reducing, waiving or cancelling any interest, fees or charges for missed payments.
Historical Performance And IFISA Process Guide
That figure is the result of over £23 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.