IFISA Permissions ‘Will Change P2P Market’ – Plus Loan Latest

Crowd Consultation

Our friends at BusinessZone predict some game-changing events in our peer-to-peer (P2P) crowdfunding sector. Without wishing to be too Delphic, our experience of the marketplace makes us think they may be on to something. Here’s an extended excerpt from a good piece of reporting.

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“Peer-to-peer works by creating a marketplace for investors to loan money directly to businesses and individuals. By cutting out traditional high street lenders and having low operating costs these providers can offer better returns for investors and loans with lower interest rates.

“The sector has been a phenomenal success story in the UK’s startup scene. The first and some of the largest platforms were launched here. The UK has world-leading alternative finance legislation and, starting with City-based Zopa in 2005, lending has ramped up dramatically over the last five years to reach £7.3bn at the end of 2016.

“Investments have qualified for tax advantages through the Innovative Finance ISA (IFISA) since April 2016, which means investors receive interest and capital gains tax-free.

“IFISAs are expected to pay between 5% and 7% APR – significantly more than the 0.8% offered by the best cash products – and £80bn was invested in ISAs last year; there’s a significant advantage on returns and a huge market to play for.

“The IFISA market is yet to come into full effect because the largest platforms are unable to offer the service. At the moment, 17 P2P providers have permission, but this group is limited to relatively small, new platforms. None of the biggest six marketplaces, which stand head and shoulders above the rest of the pack, are included.

“BusinessZone’s sources say this will happen in the next two weeks when a number of platforms will receive authorisation to offer the product from HMRC.

“Although it’s not clear what platforms are included at this point, it could be a game-changing moment in the development of the sector. The timing is great too: investor interest in ISAs peaks at the end of the tax year as the public rushes to take advantage of the annual tax allowance for these products.”


Latest Offering & Lending Risk

Meanwhile, the latest loan offering on site, an A-rated five-year loan from legal publishers, Lawpack, is rattling along at pace – 41 per cent funded at the time of writing.

But be warned: Some of the lenders’ bids may prove a little ambitious. Offers of expensive credit are often driven out at the end of the auction period by cheaper offers.

See also this tip from our Knowledge Hub:

  • If you’re involved in an auction process, watch that process carefully. There may be lots of bids at the end of the auction period, and the more expensive money gets driven out at the end as the borrower accepts the lowest bids.


Remember, capital loaned is a risk. Please read the warnings on site.


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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.