Change is Name Of Direct Lending AltFi Game

The Covid-19 lockdown has thrust change upon all sectors of UK industry. The alternative finance sector, of which Money&Co. is a well-known player, is among the most agile in the current UK economy. Our friends at P2P Finance News look at changing working practices in the direct lending sector.

Peer-to-peer lending platforms have followed the rest of the economy by shifting to remote working during the pandemic and many of the changes could remain permanent even as lockdown restrictions ease.

The nation is slowly being encouraged to go back to work and Prime Minister Boris Johnson has urged employees to travel to the office rather than work from home.

P2P lenders have slowly started planning to reopen their offices and there are signs of some lockdown-inspired changes.

Money&Co has said it will reopen its offices fully in September but founder Nicola Horlick has decided staff will be able to work from home every Friday.

“It is usually the worst day of the week to come in and out of town,” she said.

“Our systems are geared up to working remotely so we don’t all need to be in the office every day.”

Filip Karadaghi, managing director of LandlordInvest, said the buy-to-let lending platform has embraced remote working even before the pandemic.

However, he said it still needs to fit in with a company’s strategic and operational objectives.

“I personally would expect that things will go back to normal once the crisis is over, although perhaps remote working will be more common than before the crisis,” he said.

“A company and its staff’s working arrangement is important to meet the company’s strategic and operational goals, including ensuring that customers are being treated fairly.

“It is up to each company to decide if their working arrangements achieves the company’s strategic and operational objectives and make necessary changes if it does not.”

David Bradley-Ward, chief executive of Ablrate, added that working from an office is more efficient.

“We have no plans to make remote working permanent,” he said.

“It was an interesting time and we learned a lot, however working together in the office is just more efficient for our business.

“I can imagine that if you are in a city environment with lots of commuting for your staff and high rents that you may be thinking differently now.

“Our staff have a view of golf course, in a beautiful part of the world and lots of facilities so we haven’t seen any appetite for working from home permanently.

“What we have learned is that managing home workers is reasonably easy if you have the right tools, so we would not write off taking on people who do want to work from home.

Historical Performance 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). 

That figure is the result of over £21 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 two bad debts so far, representing a bad debt rate of 0.03 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.


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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.