Another Loan, Rated A, Yielding 7%, Lands On Site
Today’s spotlight falls on another new loan offering on site. Bonnington Law 3 is a vehicle that has been set up to manage a number of Plevin claims. The section below explains the nature of Plevin claims, and we extract details of the borrower’s representations – which we have made our best efforts to ensure are true, but cannot warrant that this is so.
The loan is credit-rated A, and has a yield of 7 per cent, with a 12-month term.
The claims will be run by a legal firm based in London. In 2017, the legal firm began working on Plevin claims and it currently has a team of twenty. The team has a mixture of legal and financial skills and the entire focus is on financial mis-selling.
Plevin claims
The FCA imposed a deadline of 29 August 2019 for all PPI mis-selling claims to be made. As of March 2021, £33.8 billion had been paid in compensation for the misselling of PPI policies and there were still outstanding compensation payments with the end amount likely to reach £53 billion. Plevin v Paragon Personal Finance, which was decided by the Supreme Court in 2017, opened the way for further claims after the FCA deadline. These claims are for commission paid to banks and loan companies that were not disclosed to clients at the time the PPI policies were sold. In the Plevin case, Susan Plevin had taken an unsecured loan from Paragon Personal Finance and purchased payment protection insurance (PPI) at the same time. The amount of commission taken by the lender relating to the PPI policy was 71.8%. Plevin argued that an unfair relationship existed because the lender had not disclosed the commission. She argued that, if she had known that the lender was taking 71.8% commission, she might not have bought the policy. The Supreme Court ruled that because the commission had not been disclosed, there was an unfair relationship as defined by the Consumer Credit Act 1974 and Plevin was entitled to a refund of all undisclosed commissions and interest.
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 5 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.