The Financial Conduct Authority has a tough task, for which it’s heavily criticised. It’s a thankless job, and its recent announcement of “heavy” investment in the FinTech sector shows willingness – though praise for a well-ordered sector is always going to be far away. If there’s a problem, a chorus of critics will be asking why more wasn’t done…
In a speech delivered this week by Nikhil Rathi, chief executive of the UK’s Financial Conduct Authority (FCA), to the Peterson Institute of International Economics, Rathi explained that the regulator has “invested heavily in data and technology” to take a more proactive stance and, crucially, spot harm and intervene more quickly and more broadly.
Rathi’s speech addressed the manner in which the watchdog plans to shape its regulatory approach into the future, canvassing the need for intensive dialogue between the UK and US, deepening ties on crypto-asset regulation, supporting the industry to prioritise ESG commitments, and, the need for innovative technology.
He explained that the FCA automatically scans 100,000 websites every day for fraudulent or scam activity targeting UK consumers, and that following the regulator’s decision to shift core systems to the cloud, they have transferred over 50,000 firms and tens of thousands of users to a new regulatory data platform. “Using out data lake, we aim to more swiftly identify, connect and react to firm and market issues.”
The chief executive explained that the watchdog’s analytics tools are speeding up case management and providing improved visibility of risk in each firm. “We are rolling out new analytics screening tools to help ensure firms are implementing robust controls to comply with sanctions effectively. As part of this, we have developed an automated tool to test firms’ systems and assess their ability to identify sanctioned entities effectively.
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.