Race Yet To Be Run With Starling Bank Critics
This is a story that is running, and running fast. Extraordinary allegations made against Starling Bank – whose strategy and way of doing business seem admirable to many outside observers – is subject to strident criticism from a major figure in the financial world. That criticism is not going away. Starling Bank is taking pains to rebut these allegations.
It’s head-scratching time, to say the least here: the race is not yet run on this one.
The government’s former counter-fraud minister has said he will not retract his public attack on Starling Bank, claiming it was “one of the worst” performers in distributing government-backed loans, unless he sees data that proves him wrong.
Lord Agnew claimed Starling did not run thorough checks on borrowers before handing out loans through the £47bn Bounce Back Loan Scheme.
Lord Agnew told The Times: “I have no plans to withdraw my comments until I can see some data that puts my mind to rest.”
He has submitted several questions about the lender’s performance on the scheme.
But the online lender has denied the claims aired by the former Conservative minister, who quit as the anti-fraud minister in January over the government’s “woeful” efforts to control fraud.
Starling CEO and founder Anne Boden said she was shocked by his comments.
The bank has also demanded his claim that from “what little data” he was able to gather that the bank was “one of the worst when it came to validating the turnover of businesses or submitting suspicious activity reports” be withdrawn.
A Starling spokeswoman said: “We are meeting with him imminently to discuss his observations. We hope that once we’ve met with him, he will understand that the comments he made about us are factually incorrect and that he will withdraw his remarks.
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 7 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.