Welcome New TISA Initiative Puts P2P Under The Microscope


  • The peer-to-peer (P2P) sector is coming under the microscope in the wake of the failure of one platform, and the apparent fraud of some high-profile, unregulated offerings.
The unregulated offerings were nothing to do with P2P, but the dire consequences for investors have certainly focused minds on alternative investments.The latest body to have a say is the Tax-Incentivised Investment Association (TISA), which has published a welcome guide to helping investors assess how appropriate an investment in the sector might be – a combination of the offering and the risk-tolerance of the potential investor.This move to better education for investors - elevating the understanding of risk as the flip side of potential return - is something the entire P2P sector should be pleased about. Below is an extract from a report on the initiative in P2P Finance News.

INVESTMENT and savings trade body Tisa has published a guide to appropriateness tests for peer-to-peer lending platforms to help them comply with new investor marketing rules.The guide advises P2P firms on how to identify appropriate investors and how to warn clients if a product may be inappropriate for them. It was created in response to the Financial Conduct Authority's (FCA) updated regulations for the sector, which come into effect on 9 December.Under the City watchdog's new rules, P2P platforms will need to carry out an appropriateness assessment that considers a client's knowledge and experience of the P2P investment before the platform can accept a subsequent instruction to invest. This is already a requirement for crowd bond providers and equity crowdfunding platforms.Tisa's guide advises platforms on when to issue the assessment test to new investors, how to define "complex" and "non-complex" investments, and what the appropriateness test should cover.

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.

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.

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Disclaimer: Money&Co.™ is the trading name of Denmark Square Limited, Company Number 08561817, registered in England & Wales, authorised and regulated by the Financial Conduct Authority (FCA). The company is identified on the Financial Services Register under Reference Number 727325. The registered office is 58 Glentham Road, Barnes, London, SW13 9JJ where the register of Directors may be inspected. Denmark Square Limited (ISA manager reference number Z1932) manages the Money&Co. Innovative Finance ISA.