A new £77,600 loan offering, yielding seven per cent and risk-rated A, has landed on site. The lender is seeking to fund claims for financial mis-selling. The term of the loan is 15 months.
Below are some details from the borrower’s pitch – as ever, we’ve done due diligence but cannot warrant or guarantee the truth of the representations. For full detail, register or log in here.
Transaction Summary: 15-month term A+ rating Interest only with bullet repayment 7% interest per annum (12 months interest retained).
NSL operate as a claim management/litigation firm assisting clients in a number of areas including financial advice and mis-selling. If a financial advisor has been negligent or if a client has lost money as a result of professional advice, the business can advise on the best course of action to recover losses. This can be through the Financial Services Compensation Scheme (FSCS), Financial Ombudsman Service (FOS), Pension Ombudsman Service (POS) or the Courts.
If a private non-sophisticated investor is sold an investment by a regulated IFA or Investment Manager, and suffers loss, they may have a case against the IFA for mis-selling. The complaint is adjudicated by the Financial Ombudsman Service (FOS) and if the FOS finds for the investor, the IFA/Investment Manager is required to make good those losses. IFAs and Investment Managers carry Professional Indemnity Insurance In the event that the IFA cannot pay or enters bankruptcy, the claim is made against the insurer. Where the defendant becomes insolvent, the insurer will either have ceased cover or, they will deny liability on technical grounds In the event that no redress is available from either the IFA/Investment Manager, or it’s PII insurer, the Financial Services Compensation Scheme (FSCS) will offer redress up to £85,000 to the investor. The majority of claims have to go through the entire process before eventual settlement by the FSCS.
Historical Performance And IFISA Process Guide
That figure is the result of over £24 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 2020/21 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.