FCA's New Certification Requirements For P2P Are Good News
The Financial Conduct Authority (FCA) has been taking a long, hard look at the peer-to-peer (P2P) lending sector in the light of recent high-profile failures, such as that of Lendy. The latest compliance moves from the FCA have been greeted in tones of shock and horror (see below, a report from our friends at P2P Finance News that is rather disapproving, at least). A different way of looking at all this would be to argue that the FCA is borrowing regulatory structure from the asset-management sector, and applying much of it to P2P.
AS IF peer-to-peer lenders didn't have enough regulations to grapple with, the Financial Conduct Authority (FCA) on Friday announced its final rules for the extension of the Senior Managers and Certification Regime (SMCR).These regulations will apply to all FCA-regulated firms from December, therefore including most P2P lenders, aiming to increase individual accountability of senior staff in financial services for any regulatory failings.This could mean a compliance headache for some firms, which may have to change their processes to ensure they are operating in line with the new rules.
Loan Latest 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 £17 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 5 years and has only had one bad debt so far, representing a bad debt rate of 0.04 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 2019/20 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.