EU Launches Digital Finance Platform – Plus Loan Auction Latest
For our money, the best role of government and its regulators is in the background of the FinTech. They are not farmers, but conservators of a business-friendly environment.
The European Commission has launched the EU Digital Finance Platform, a website designed to build dialogue between fintech players and supervisors.
First announced as part of the EC’s digital finance strategy in 2020, the platform went live last week, complete with a virtual launch event attended by Commissioner Mairead McGuinness and Verena Ross, chair of the European Securities and Markets Authority.
The site is tasked with the objectives to “overcome fragmentation and support the scaling up of digital financial services across the Single Market”.
At launch it consists of two main building blocks. The first is an observatory offering interactive features such as a Fintech Map, events and a section where users will be able to share relevant research material.
The second section is a gateway which will act as a single access point to supervisors, with information about national innovation hubs, regulatory sandboxes and licensing requirements. This part of the Platform will also host functionalities linked to cross-border testing.
The end of the 2021-22 tax year and the deadline for Individual Savings Plans on Tuesday leaves us with just one open loan auction.
- Mar-Key has a credit rating of A+, a yield of 7 per cent and a term of two years. It is currently 42 per cent filled.
- You can see more detail by logging in and downloading the credit note.
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 £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.
- Money&Co. has been lending for over seven 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 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.