FinTech Players Face Chilly Winter If Rates Go Negative – Plus Loan Latest

Some major financial institutions (Coutts Bank, for example) have indicated they will not apply negative interest rates, should the Bank of England go that way, to deposit accounts. Others are not so clear What would the fallout be – especially for the alternative finance sector and its players?

Experts believe that some EMIs may not be able to cushion the financial impact of negative interest rates,  who fear any costs could be passed on to customers through increased fees

They believe the prospect of negative interest rates could have dire consequences for some Electronic Money Institutions (EMIs), who also fear that EMIs could increase fees on the economic hard up to help mitigate the impact of negative interest rates.

With interest rates close to zero, the Bank of England (BoE) is looking at creative means to boost the economy- including reducing the interest rate below zero for the first time.

The possibility of negative interest rates was given a fresh impetus following a recent interview with Silvana Tenreyro, who sits on the BoE’s monetary policy committee, who told the Sunday Telegraph there was “encouraging” evidence the policy would fuel an economic recovery amid Covid-19.

The BoE set the base rate at the unprecedented level of 0.1 per cent in March and a shift to a negative base rate would mean the BoE would charge banks and buildings societies to hold money.

Other central banks which currently have negative interest rates include Japan, Sweden, Switzerland and the European Central Bank.

While much of the media coverage has focused on the impact negative interest rates would have on savings accounts and mortgages, the impact on EMIs could be significant.

Some experts are predicting the cost EMIs will have to bear, amid the pandemic, could cause financial havoc, even resulting in the closure of some EMIs, while some say that EMIs might ratchet up fees on their customers, some of whom are financially struggling.

Loan Latest

  • Our latest loan offering, the property-backed offering from, has attracted 41 per cent of the £150,000 it is seeking. The loan is rated A+ by our credit committee, and yields 8 per cent over a three-year term. For more detail, login.

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 £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.

  • 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.

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.


Search blog

You may put double quotes around your search to search for literals. Max. 4 words inside quotes (dashed words count as one word).

Allowed symbols: " ' & -

More from blog

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.