The Financial Conduct Authority’s (FCA) new chief executive Nikhil Rathi has said that the regulator will be focusing on the risks involved with higher-return investments, as he set out his strategy.
Speaking on the City watchdog’s Inside FCA podcast, Rathi said the regulators remains “very vigilant” to the risks faced by consumers in a low interest rate environment.
“It’s only natural that consumers are going to be looking for higher returns and also as people have more flexibility over how they deploy their savings, there’s also the opportunity to take more risk as well,” Rathi said.
“That can mean being exposed to scams particularly online and sometimes fraudulent activity and we’re going to be very vigilant around those activities too.”
He didn’t name any products specifically but the FCA has a history of lumping P2P lending into the risky end of financial services.
Rathi also acknowledged that there was a growing risk of regulated firms failing during the pandemic.
“We cannot stop some of the firms that are under FCA oversight from failing,” he said.
“We are not nor should we be a zero-failure regulator.
He added that in those circumstances, the FCA will work to “ensure that risks are managed and consumers are adequately protected.”
Founded in 2019, Hopin is a live online events platform where attendees can learn, interact, and connect with people from anywhere in the world.
The virtual event provider recently raised $125 million (approx £94.3 million) in Series B funding led by existing investor IVP and new investor Tiger Global and joined by Coatue and DFJ Growth, along with Hopin’s returning investors Accel, Northzone, Salesforce Ventures, and Seedcamp.
With the latest round, the London-based startup has escalated from four employees to a £2B valuation in 8 months after its launch, and has scored the title of one of the fastest-growing startups ever.
Historical Performance And IFISA Process Guide
That figure is the result of over £20 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.