As we saw in yesterday's News story, the P2P asset class is not necessarily correlated with stocks and shares. But P2P, as a sub-division of alternative finance, is not divorced from the mainstream. As such, P2P stood to benefit from the year-old open banking initiative. This, as our friends at P2PFN point out, "mirrors the EU's Revised Payment Services Directive [which] mandates high street banks to share anonymised customer data with approved third parties (subject to customers providing their approval)".Take-up (like the slow start for Innovative Finance Individual Savings Accounts) has been fairly low. As P2PFN puts it: "While the project has the potential to create significant growth opportunities for peer-to-peer lenders, things got off to a slow start. When the new regulations were introduced on 13 January 2018, only four out of the UK's nine largest banks were able to meet the deadline."Imran Gulamhuseinwala, Open Banking implementation trustee, recently said that the initial Open Banking launch made "a tremendous step forward" but "was not as good as it should have been" as "the customer journey was not great"."It worked but it was a little bit hairy," he said at the Open Banking Expo in London."But actually my work with the government and the banks means that we're actually going to fix that."
Let's hope so. Meanwhile, anyone looking to take advantage of a 7 per cent, net of charges and free-of-tax IFISA should look below at the process – and be sure to understand the risks as well as the potential benefits of investing.Money&Co. lenders have achieved an average gross return of over 8 per cent across the loans available on site. There have been no bad debts amongst the nearly £15 million facilitated so far.
A Process Guide To Innovative Finance ISA InvestmentAll loans on site are eligible to be held in a Money&Co. Innovative Finance Individual Savings Account (ISA), 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:
Risk: Security, Access, YieldDo 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.