Peer-to-peer lending sites: MSE guide discussion

soulsaver

I wasn't certain which is why I said 'doubt'.

And if in doubt & you went my route you couldn't fall foul.

If you did follow the 'safe' route, can the new provider detect that a transfer isn't required?

masonic

soulsaver wrote: »

And if in doubt & you went my route you couldn't fall foul.

If you wanted to transfer all of your current year subscriptions, and either your ISA contained no previous year money, or your ISA provider allowed partial transfers, then you have a choice to go by either the flexible withdrawal or transfer form route.

You would fall foul if you wanted to transfer part of your current year subscriptions to an ISA of a different type because this is prohibited by the ISA rules. Even though you can now effectively part-transfer current year money using flexible withdrawals, you cannot part-transfer current year money using ISA transfer forms, even between ISAs of different types.

You could also fall foul of provider specific restrictions that prevent partial transfers (not many IF or S&S ISAs allow partial transfers).

If you did follow the 'safe' route, can the new provider detect that a transfer isn't required?

The receiving provider will receive no information from the sending provider regarding the T&Cs of the account (i.e. whether it offers flexible withdrawals), so no it can't.

When a flexible withdrawal is made, it is the existing provider that records this and at the end of the tax year reports to HMRC the net current year subscriptions made (which is equal to:
Total Subscriptions - Flexible Withdrawals, so if you pay in £10,000 and flexibly withdraw £5,000, they will report £5,000 current year subscriptions and £15,000 available allowance. You can usually verify the available allowance has been adjusted and query if there is a discrepancy - obviously you'll be able to point out where in the T&Cs it states flexible withdrawals can be made).

The new provider also knows nothing about ISAs that you've subscribed to elsewhere. They will allow you to pay in up to £20,000 regardless and report to HMRC what subscriptions you have made to the ISA(s) you hold with them. They are also unlikely to know the rules well enough to make a factually correct comment.

The three examples below are instances of breaking the rules, (1) the overall subscription rule, (2) the one ISA of each type rule, (3) the flexible withdrawal rules. All of these are undetectable by the ISA providers assuming the ISA providers are all different. The fourth example can be detected.

(1) If you paid £10,000 into a cash ISA, £10,000 into a IF ISA, £10,000 into a S&S ISA, and finally flexibly withdrew £10,000 from your IF ISA and paid it into your S&S ISA, none of the providers would have any knowledge that you'd subscribed a total of £30,000 in the current tax year until HMRC (or you) intervened.

(2) If you paid £10,000 into a cash ISA, £1,200 into a HTB ISA, £5,000 into a IF ISA, £3,800 into a S&S ISA, and finally flexibly withdrew £5,000 from your IF ISA and paid it into your S&S ISA, none of the providers would have any knowledge that you'd subscribed to two cash ISAs in the same tax year until HMRC (or you) intervened.

(3) If you paid £10,000 into a cash ISA, £10,000 into a S&S ISA, and finally flexibly withdrew £10,000 from a previous tax year IF ISA and paid it into your S&S ISA, none of the providers would have any knowledge that you'd subscribed a total of £30,000 in the current tax year until HMRC (or you) intervened.

(4) If you paid £20,000 into a S&S ISA, and then flexibly withdrew £10,000 from a previous tax year IF ISA and tried to pay it into your S&S ISA, you would be prevented from doing so and would have until the end of the tax year to pay it back into the original account.

So, it is the customer's responsibility to make sure that they've subscribed to a valid combination of ISAs, that they've not exceeded their allowance across all of the ISAs to which they've subscribed, and that they understand the T&Cs of the accounts they hold (e.g. whether or not flexible withdrawals are offered).

soulsaver

Thanks for taking the trouble. Good that it's that simple ...er :huh:

masonic

soulsaver wrote: »

Thanks for taking the trouble. Good that it's that simple ...er :huh:

Indeed. It started off as quite a simple concept, but each tweak and reform added another layer of complexity. HMRC used to publish a consolidated set of 'Guidance Notes' for ISA managers, but seem to have given up on this in recent years. The 2014 version was 269 pages. The introduction of flexible ISAs alone added another 25 pages.

Anniebythesea

Hiya.... just been pondering something & wondered if someone brighter than me can give it some thought??

When I last withdrew funds from my old ZOPA Access account I was charged an MLA (market level adjustment). This was due to the fact that loans being offered to newer investors are now available at higher rates (more attractive); so a fee is charged to make up the difference between my (older & cheaper) loans and any new ones.

So.... if interest rates are rising in general & therefore possibly personal loan rates... does this mean that any older loans will almost always attract an MLA when withdrawn before end of the loan period, in an environment of rising interest rates??

If this is the case wouldn't this make ZOPA & the like rather unattractive & more risky in the event of interest rates beginning to rise at anything other than a snails pace?

Any thoughts please?

masonic

thaliaroach wrote: »

So.... if interest rates are rising in general & therefore possibly personal loan rates... does this mean that any older loans will almost always attract an MLA when withdrawn before end of the loan period, in an environment of rising interest rates??

If this is the case wouldn't this make ZOPA & the like rather unattractive & more risky in the event of interest rates beginning to rise at anything other than a snails pace?

Any thoughts please?

Yes and yes, but who knows what will happen to interest rates. If they rise, then nobody is going to want to step into your low rate loan contracts unless they are offered an appropriate discount to make up their return to that available in the market. In some cases you could be unable to sell.

If that didn't happen, then what would stop lenders from selling up their low rate loans in order to profit from buying into higher rate ones?

It is best to be in a position to hold loans to term.

keyboardworrier

This is an interesting video tour of the offices at Assetz Capital https://www.financialthing.com/get-to-know-assetz-capital/

firestone

Albio wrote: »

P2B or B2B seems more attractive. In most cases, you would get a guarantee and in case of default you would not lose principle amount, just the interest. Debitum Network offers10-15% annual interest rate for investment in short term loans for SMEs. Looks better than investing in stock indexes, government bonds or mutual funds.

Maybe to be clear you should mention you are also posting on the P2P indie forum this morning as a "rep" - so guess you would say its good!

Ash_Pole

Not a great first day for the Funding Circle IPO:

https://www.theguardian.com/business/2018/oct/03/peer-to-peer-lender-funding-circle-shares-plunge-floatation

Toe_Dipper

So, after almost 5 years with FC, what have I learned?

At first, I made good returns. Then they forced everyone into autobid with no discretion on who to lend to. I queried this and was told most investors are not active and so we want everyone to play the same way. In other words, you are making more money than other people because you make the effort....

Then came the disastrous property experiment. I am still losing money as so-called A+ loans default. What’s more, they’d already taken away my ability to avoid property loans. No wonder. Who, knowing what they are doing, would have gone along with lending to these?

I’m still well ahead of where I would have been with a bank savings account, but what a shame. It could have been so much better for everyone.

Now that property lending is over, maybe we’ll get back to real p2p returns.