No government is perfect. But it's hard to fault the present administration's attitude to the peer-to-peer (P2P) lending industry. The government recently announced the beginning of legislation that will "clarify that no business borrowing through a peer-to-peer platform needs to be regulated as a 'deposit taker' (often referred to as a 'banking licence') unless that is their core business. The legislation will ensure that the industry can continue to thrive and innovate while still benefiting from the UK's high quality regulatory standards.
The draft legislation will provide certainty for UK businesses across a range of sectors including manufacturing, construction, and hospitality who finance their growth with peer-to-peer lending. Without this legislation, peer-to-peer platforms lacked clarity on whether some of their borrowers would require a 'banking licence' to borrow through their platform. This would have dramatically increased costs for platforms and borrowers, and impacted the sustainability of peer-to-peer business models, reducing the finance available to businesses."
Nicola Horlick, CEO of Money&Co., welcomed the move: "Peer-to-peer lending is now an essential form of finance for many small businesses. It is incredible that 15 per cent of loans under £1 million are now originated by peer-to-peer lending platforms rather than the High Street banks. It is very welcome that the government is legislating to clarify the position with regard to the status of these platforms as this will protect this important source of finance for small businesses."
Stephen Barclay, the Economic Secretary to the Treasury, said: "Peer-to-peer lending has brought about real benefits, not only for the UK's small and medium sized business community, but our economy at large. This vital clarification will mean that businesses can continue to access the finance they need to grow and expand, helping us to build an economy that is fit for the future."
Money&Co. Podcast: We asked David Buik of London investment bank, Panmure Gordon, Baroness Susan Kramer, who holds the Treasury brief for the Liberal Democrats in the House of Lords, and Money&Co. CEO, Nicola Horlick, for their views of the financial highlights of 2017 and their predictions for 2018. This podcast of over 25 minutes also focuses on the outlook for the UK's small and medium-sized companies, the lifeblood of the UK economy - and of course the borrowers who find funding for growth via our platform.
Peer-to-peer (P2P) lending is about bringing individuals seeking a good return on capital together with businesses seeking funds to grow. The average gross return achieved by lenders is 8.6 per cent (7.6 per cent net). This compares with 1.3 per cent, which is the best return currently available on cash deposit with a bank or building society, according to comparison sites such as Moneyfacts. See also risk factors, at the foot of this page.
In addition to new loan offerings, our secondary loan market, offering existing loans for sale by lenders, is available to registered Money&Co. users.
All loans can be held, tax-free, in an Innovative Finance Individual Savings Account, or Innovative Finance ISA.
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 an earlier article on security, access and yield.
If you haven't made a loan via Money&Co. before, please read the risk warnings and the FAQ section. You may also wish to consult a financial adviser before making an investment. Capital is at risk, once loaned.