Our friends at Finextra report an FCA initiative in monitoring critical third -party services to “strengthen resilience…” How will this affect banking licence applications, amongst other activities? We await developments.
A discussion paper from the Bank of England (BofE), Financial Conduct Authority (FCA), and Prudential Regulation Authority (PRA) proposes new standards for monitoring services provided by critical third parties (CTP) to strengthen operational resilience in the UK.
Under the Financial Services and Markets bill, which was proposed on Wednesday and is currently before Parliament, the BofE, FCA, and PRA will be granted statutory powers, including enforcement powers, to supervise CTP services in financial markets.
CTPs deliver services to financial institutions and financial market infrastructures (FMIs) which offer benefits such as scalability, cost-efficiency, and improved user experiences, however they can also harm consumers if disrupted. The move aims to reduce the risk to financial stability that arises if CTPs fail.
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.