Peer-to-peer lending sites: MSE guide discussion

masonic

jamesd wrote: »

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.

Hopefully I'm writing as though these types of non-mainstream investments have more restrictions around their sale to retail clients than P2P does, as that was the point I have been trying to make. Yes, I fully acknowledge that unregulated investments are regulated in various ways, such as those in COBS 4.7 discussed in my previous post - that's exactly what I am trying to get across.

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.

jamesd

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.

masonic

jamesd wrote: »

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.

I agree with your sentiments, but this regime of 'light touch' regulation clearly isn't working. There are several ways to address this:

(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.

Nardge

masonic wrote: »

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 Regards

masonic

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.

masonic

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.

jamesd

Nardge wrote: »

'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?

Because you are still within the £20,000 allowance HMRC will "repair" the Kufflink subscription as standard practice.

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.

masonic

jamesd wrote: »

Because you are still within the £20,000 allowance HMRC will "repair" the Kufflink subscription as standard practice.

The whole Kuflink subscription is invalid because it is the second IFISA Nardge has subscribed to in the 2018/19 tax year (technically the fourth, but the other two were flexible and subscriptions were flexibly withdrawn). So the funds will likely be removed during repair and lead to some unused allowance in the 2018/19 tax year. Not that I'm advocating overloading the valid IFISA to compensate for that.

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.

Unlikely as the subscription was made last year.
Earlier discussion on the topic if you're interested: https://forums.moneysavingexpert.com/discussion/comment/75115204#Comment_75115204

jono1975

I am new to this and have invested £1000 with Ratesetter last month with their one year plan, I was inticed by the £100 new investor bonus. Interest due to be paid in 2020.

I am a basic rate tax payer and don't fill in self assesments. This year my tax code has been adjusted to claim untaxed interest as I've gone over my PSA.

My question is, do HMRC receive interest details from P2P in the same way as my savings accounts and adjust my tax code accordinly, without my need to fill in a self assessment.

Sorry if this has been asked before.

DireEmblem

There seems a bit of negativity on this thread of late - I think P2P lending is great. I've been in Zopa almost from the start, and although I miss the safeguard, my returns after bad debt have always averaged above the 5% mark, which is pretty decent given the consistency.


Ok yes, so I could possibly earn more investing, but its good to diversify in terms of savings.