MSE News: Peer-to-peer ISA offering 4.7% interest is rolled out - but beware of risks 10 February 2017 at 11:31AM in ISAs & Tax-free Savings 7 replies 3.6K views

Legacy_user

Savers can earn a tempting 4.7% tax-free on a five-year Innovative Finance ISA (IFISA)...

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'Peer-to-peer ISA offering 4.7% interest is rolled out - but beware of the risks'

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jamesd

The five currently operating IF ISA providers and a regularly updated list can be found here. One more due next week.

Describing Lending Works as a "major" P2P lender appears misleading given that they only lent 2.4 million Euros in January 2017. The UK biggest five, Funding Circle, Zopa, RateSetter, Lending Works and Assets Capital, lent 121, 94, 78, 37 and 22 million respectively. Maybe you were scammed by something using major to mean every P2P lender that had interim permission from the FCA? Several dozen of them!

They did get a million Pounds of new lender money in the first few days and temporarily suspended accepting more while they line up new deals. A sign of what's to come in IF ISA popularity, perhaps.

Their most unique feature is insurance that can repay loans where that's affected by unemployment, accident, sickness or death, combined with a protection fund. The insurance should help to keep things in good shape during a recession.

They have been very responsive to ISA corrections and clarifications and that's a good sign if their customer service is as excellent.

They look like an interesting choice for those who want safety first, at the cost of lower returns (though higher than the protected Zopa and RateSetter products).

TheShape

I've been looking at options for p2p and it appears that on many platforms you pick the loans you want to make with reference to the loan term, return etc.

Am i right in thinking this is a passive way of investing in p2p?

Do you just put in your money, pick the term to invest and Lending Works effectively pay you a return for using your capital?

jamesd

Yes, that's how things work. You normally have some responsibility for deciding which loans are a good deal, particularly on the risk side of things. The ones where you pick the loans tend to offer higher interest rates. Bond Mason is a lower work alternative that picks loans for you and expects to deliver about 7% after bad debt. It's an interesting choice for those who want a hands off approach. But no ISA yet from them.

TheShape

New ISA subscriptions currently suspended but having spent most of the day reading up on Lending Works/reviewing their site from top to bottom I decided that it seems like a good first step into p2p.

Of course, their website was down for a period this evening but I've signed up and made an initial deposit of £100 into the standard(non-ISA) account. Interested to see how it works out.

brewerdave

I suspect that these p2p lenders are going to get deluged with new money - the last of the "better" long term cash ISAs are maturing or have matured - there must be a LOT of people who think that equity markets are too high to move into S & S ISAs - but are they going to find enough sound investment prospects ??

simoningram

It looks like Landlord invest have now stepped in with a HMRC/FCA approved IFISA offering up to 12%. I'm assuming risks with this are higher still than say Lending Works?

masonic

simoningram wrote: »

It looks like Landlord invest have now stepped in with a HMRC/FCA approved IFISA offering up to 12%.

See http://forums.moneysavingexpert.com/showthread.php?p=72131050

I'm assuming risks with this are higher still than say Lending Works?

Especially when it comes to P2P lending, you can't assume a correlation between rate and risk. Some platforms seem to be setting rates based on the minimum they think they can get away with - unfortunately a lot of their customers don't appreciate how much risk they are taking on and how much interest they ought to be demanding to cover that risk.