Peer-to-peer lending sites: MSE guide discussion
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None of those regulatory restrictions apply to unregulated investments, They apply to certain types of regulated investment and the FCA administers them as specified by the acts of Parliament that imposed them.
Zopa started out as an almost unregulated investment, with no FSA supervision, just the OFT lending license that was required, but not to protect lenders. They imposed their own limits to help lenders avoid being classed as lending as a business activity but neither the OFT nor HMRC required it.
Both EISs and VCTs are unregulated collective investment schemes, and investors in those coming through retail channels need to self-certify as belonging to one of the above investor classes, and again I believe the Financial Promotions must be approved by a FCA Authorised Firm.
The Restricted Investor Statement includes the text "I undertake that in the twelve months following the date below, I will not invest more than 10% of my net assets in non-readily realisable securities."
See COBS 4.7 Direct offer financial promotions, in particular 4.7.7 which applies to Financial Promotions that are disseminated in such a way that they are likely to be received by a Retail Client.
Non-readily realisable securities include (c) a non-mainstream pooled investment, such as (a) a unit in an unregulated collective investment scheme.
None of this currently applies to P2P lending (though a small number of P2P platforms voluntarily comply with COBS 4.7.9-10). It is currently regulated under the 'light touch' regime, but it wouldn't be difficult for the FCA to include P2P within the non-mainstream pooled investment umbrella and wash its hands of trying to regulate the sector any more stringently than unregulated investments. I doubt anyone would notice the difference, other than Retail Clients who arguably have too much of their net assets invested in P2P.0 -
Neither VCTs nor EISs are generally classed as unregulated collective investment schemes, though it is possible to structure them in a way that is caught by the unregulated collective investment schemes regulations. The FCA considered and rejected that idea.
Not sure whether you missed my point. You seem to be writing as though the FCA UCIS regulations mean there's no regulation of them, rather than them not fitting into certain FCA-regulated category, so something can be a U (by the FCA) CIS but still be a collective investment that is regulated in various ways.0 -
Not sure whether you missed my point. You seem to be writing as though the FCA UCIS regulations mean there's no regulation of them, rather than them not fitting into certain FCA-regulated category, so something can be a U (by the FCA) CIS but still be a collective investment that is regulated in various ways.
Retail investors must make a declaration and pledge not to invest more than 10% of their net worth into these types of investment, whereas there is no such restriction for P2P. My previous post #2437, which started our exchange stated that I wouldn't be surprised if the same rules were applied to P2P such that investors would either need to certify as high net worth or sophisticated or agree not to put more than 10% of their net assets into P2P. This wouldn't be a bad thing in my view.0 -
The biggest issue is that it wouldn't address the key trouble areas in P2P, like Moneything grossly misrepresenting the risk of the Birkenhead loan by not mentioning the earlier overspending by the developer, then them defaulting by overspending being the reason for the third loan. Thereby largely disregarding their regulatory requirement for them to properly disclose the risk, which is a critical role the P2P firms are supposed to be fulfilling. It's a thing that should be distinguishing P2P from mini-bonds. The Birkenhead spending issues continued until the loan defaulted, leading to substantial initial losses on the security sale to those who'd had the history of this kept from them, that might not be recovered by the various forms of legal action that Moneything are trying.
It's the sort of thing that caused me to recommend against using Lendy in 2016. If you can't trust the loan descriptions you aren't in a position to know whether a loan's risk level is appropriate and the platform ends up being uninvestable because you aren't able to pick which loans to go into.0 -
The biggest issue is that it wouldn't address the key trouble areas in P2P, like Moneything grossly misrepresenting the risk of the Birkenhead loan by not mentioning the earlier overspending by the developer, then them defaulting by overspending being the reason for the third loan. Thereby largely disregarding their regulatory requirement for them to properly disclose the risk, which is a critical role the P2P firms are supposed to be fulfilling. It's a thing that should be distinguishing P2P from mini-bonds. The Birkenhead spending issues continued until the loan defaulted, leading to substantial initial losses on the security sale to those who'd had the history of this kept from them, that might not be recovered by the various forms of legal action that Moneything are trying.
It's the sort of thing that caused me to recommend against using Lendy in 2016. If you can't trust the loan descriptions you aren't in a position to know whether a loan's risk level is appropriate and the platform ends up being uninvestable because you aren't able to pick which loans to go into.
(1) Make P2P firms liable in cases where they have not met their regulatory requirement to make their communications clear, fair and not misleading, preferably with FSCS protection for Financial Ombudsman decisions against the firm [very unlikely]
(2) Take enforcement action against firms who issue misleading financial promotions and other communications such that it is sufficiently harmful to their business that they would not dare risk it [possible, but the FCA is not known for acting swiftly - it might take them a year or two to get around to doing something, and this course of action risks platform failure]
(3) Withdraw the FCA stamp of approval from this type of investment and make the platforms issue the same sort of health warnings and restrictions required of non-mainstream investments.0 -
Unfortunately, the introduction of the secondary market does not change the fact that the Kuflink ISA is not flexible and you have paid into it this tax year.
Your choices remain the same:-
- Transfer the invalid IFISA to a valid ISA (e.g. RS) before the end of the tax year (cost: £35)
- Allow HMRC to instruct Kuflink to invalidate and remove the money (cost: a small amount of tax on interest within the ISA)
Good Morning,
Apologies as this query is not exactly about P2P, but does stem from it.
Masonic also previously outlined my options here.
'New' money was paid into two P2P firms in error (Ratesetter and Kuflink) this tax year.
Payment of £142.58 into Kuflink makes a double subscription, I'll be hearing from HMRC as a result.
We all have a £20,000 ISA allowance. HMRC will "invalidate and remove the money" aka the Kuflink £142.58.
- Once removed, this will mean I'll have only invested £19,857.42 (£20,000 - £142.58)?
- If to oversubscribe £20,142.58 now, once HMRC have expunged the Kuflink money, this will leave £20,000 overall?
- Should I thus oversubscribe to £20,142.58, or that will incur extra penalty?
I look forward to hearing from you,
With Kind Regards0 -
It wouldn't incur any extra penalty, but there is a slim chance HMRC might forgive your original mistake and not take any action, which is even less likely if you have both oversubscribed overall and subscribed to an invalid combination of ISAs.0
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For those unfortunate enough to have invested in Collateral, a new FAQ has been posted on the administrators' website: https://www.bdo.co.uk/getmedia/7cbbab1e-f4b5-4d0e-b150-bebeba0609fc/FAQ-15-March-2019.pdf.aspx
Note the error in the date of the next report, which should read 27th May 2019.0 -
'New' money was paid into two P2P firms in error (Ratesetter and Kuflink) this tax year. Payment of £142.58 into Kuflink makes a double subscription, I'll be hearing from HMRC as a result.
We all have a £20,000 ISA allowance. HMRC will "invalidate and remove the money" aka the Kuflink £142.58.
- Once removed, this will mean I'll have only invested £19,857.42 (£20,000 - £142.58)?
- If to oversubscribe £20,142.58 now, once HMRC have expunged the Kuflink money, this will leave £20,000 overall?
- Should I thus oversubscribe to £20,142.58, or that will incur extra penalty?
If you were to add more money to the Ratesetterr ISA HMRC may tell them to remove the excess via a partial repair notice.
You can call the HMRC ISA Helpline for guidance on what to do.
Before contacting HMRC you might usefully contact Kuflink to find out whether you're still in the period when you can cancel or withdraw your application and be refunded. Easiest way because "investors will be treated as though they have not subscribed to an ISA". It won't even be included in their usual reporting to HMRC.0 -
Because you are still within the £20,000 allowance HMRC will "repair" the Kufflink subscription as standard practice.Before contacting HMRC you might usefully contact Kuflink to find out whether you're still in the period when you can cancel or withdraw your application and be refunded. Easiest way because "investors will be treated as though they have not subscribed to an ISA". It won't even be included in their usual reporting to HMRC.
Earlier discussion on the topic if you're interested: https://forums.moneysavingexpert.com/showthread.php?p=751152040
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