IFISA / Ratesetter question

crazychamps

Hi All,

I've got a few questions that I'd be grateful if I could receive some help on.

Ratesetter has been on these forums quite heavily over the past month so I did some digging myself to see if it was worth it. I've been aware of P2P for a couple of years but never ventured into it as I preferred to build up my S&S ISA first - the only reason I am interested in p2p now is largely due to the ratesetter joining bonus of £100 and to dip my toes and see if it is worth it.

IFISA Question

Once the 1 year is over, is it possible to transfer the IFISA amount to an S&S ISA? Is the best option maybe to change the IFISA all to cash, withdraw it then invest it in the S&S ISA or are the S&S ISA / IFISA not considered flexible and I would lose the ~£1.1k allowance?

Ratesetter question

1. Risk - Does anyone who uses ratesetter worry that the ownership company (retail money market ltd i believe) has made significant losses in the past 2 years)? This could impact ratesetter deciding to withdraw the £100 bonus part way through the year as their T&Cs clearly state:

The promoter of this offer is RateSetter (a trading name of Retail Money Market Ltd), 6th Floor, 55 Bishopsgate, London, EC2N 3AS and we reserve the right to amend or withdraw the offer at any time.

or worse could happen (them going bust).

2. If I refer my friend, would that mean I would get £150 for a total of £1k invested (1 x £100 + 1x£50 as referral bonus)?

Thanks in advance.

Alexland

crazychamps wrote: »

Once the 1 year is over, is it possible to transfer the IFISA amount to an S&S ISA? Is the best option maybe to change the IFISA all to cash, withdraw it then invest it in the S&S ISA or are the S&S ISA / IFISA not considered flexible and I would lose the ~£1.1k allowance?

Yes it should be possible once you have liquidated any loans if the S&S ISA provider accepts transfers from IFISA providers. We had a recent thread where a Cash ISA provider was saying they did not accept IFISA transfers. I plan to transfer our RateSetter IFISA accounts into existing S&S ISAs after 12 months. If you want to be really sure you could ask your S&S ISA provider.

crazychamps wrote: »

1. Risk - Does anyone who uses ratesetter worry that the ownership company (retail money market ltd i believe) has made significant losses in the past 2 years)?

Yes I am concerned about it but decided it was worth the risk for an extra £100 on the £1000 investment. We will not be depositing more or staying with them for longer than 12 months. On just their normal interest rates it doesn't seem worth the risk.

crazychamps wrote: »

2. If I refer my friend, would that mean I would get £150 for a total of £1k invested (1 x £100 + 1x£50 as referral bonus)?

Yes I referred my wife and got the £50 in my RateSetter Everyday Account and we expect 2 lots of £100 at the end of the 12 months.

Alex

masonic

It would be less messy to avoid the IF ISA if investing for the £100. RS could introduce charges for transferring an ISA in the future.

The reported losses are somewhat concerning and this was discussed on the main P2P thread. I limit the amount I'm willing to invest there, and would not accept the usual rates on offer as being adequate for the risk exposure. But the £100 incentive is more than enough to compensate the risk of investing £1000 there for a year IMHO.

crazychamps

Thanks Alex and Masonic.

I'll ask my S&S ISA provider if they accept IFISA transfers tomorrow.

Did either of you go with the rolling market (by inserting your specific % amounts) or 1 year market? I also take it that you extract all interest paid to keep the bare minimum of £1000?

Alexland wrote: »

Yes I am concerned about it but decided it was worth the risk for an extra £100 on the £1000 investment. We will not be depositing more or staying with them for longer than 12 months. On just their normal interest rates it doesn't seem worth the risk.

If I may ask, how many more months do either of you still have till you receive the £100 bonus?

I take it the idea is that if Ratesetter goes down another provider will buy their loan book. Meaning you lose the £100 bonus but still get the interest and capital on the loans you have (minus the bad debts that default if the provision fund gets wiped out - which shouldn't happen unless they start taking on riskier loans to try and increase their profit margin). Therefore you still get interest that beats / matches inflation or other bank saving accounts (i.e. risk is quite low of any or severe capital loss).

But in such a case of a Ratesetter default and another P2P provider taking over the loans, what would happen to the provision fund? The below bolded statement seems to be a worry as they may play with the words on "what they deem is strong enough" to try and access that pot of cash and keep trading for as long as possible.

Any surplus (where losses are less than money received) at the end of a loan’s life will accrue to RateSetter but will remain in the Provision Fund unless the RateSetter Board deem that the Provision Fund is strong enough for it to be paid to Retail Money Market Ltd.

masonic wrote: »

It would be less messy to avoid the IF ISA if investing for the £100. RS could introduce charges for transferring an ISA in the future.

If that were the case, I think that it may be best to just withdraw it cash and take the ISA allowance loss unless the charge is "reasonable".

EDIT: When they state that "we reserve the right to amend or withdraw the offer at any time" are they able to cancel the £100 bonus after you opened the account for x months or is it that they can amend / withdraw it for any new account holders?

masonic

crazychamps wrote: »

Did either of you go with the rolling market (by inserting your specific % amounts) or 1 year market? I also take it that you extract all interest paid to keep the bare minimum of £1000?

I don't remember, but I only ever recall investing money in the 3 and 5 year markets (the 3 year market is now gone).

If I may ask, how many more months do either of you still have till you receive the £100 bonus?

I received mine 2-3 years ago

I take it the idea is that if Ratesetter goes down another provider will buy their loan book. Meaning you lose the £100 bonus but still get the interest and capital on the loans you have (minus the bad debts that default if the provision fund gets wiped out - which shouldn't happen unless they start taking on riskier loans to try and increase their profit margin). Therefore you still get interest that beats / matches inflation or other bank saving accounts (i.e. risk is quite low of any or severe capital loss).

But in such a case of a Ratesetter default and another P2P provider taking over the loans, what would happen to the provision fund? The below bolded statement seems to be a worry as they may play with the words on "what they deem is strong enough" to try and access that pot of cash and keep trading for as long as possible.

You should read a bit more about how the provision fund works. It does not need to get wiped out for investors to suffer loss of interest, or indeed capital. It was changed a year or two ago to be more discretionary.

If that were the case, I think that it may be best to just withdraw it cash and take the ISA allowance loss unless the charge is "reasonable".

It depends how much you value that part of your ISA allowance. What do you stand to gain from using it in the first place?

EDIT: When they state that "we reserve the right to amend or withdraw the offer at any time" are they able to cancel the £100 bonus after you opened the account for x months or is it that they can amend / withdraw it for any new account holders?

If you've complied with the first part of the terms (open and invest) before they pull the offer, then you would be eligible for the bonus providing you continued to meet the conditions over the whole 12 months.

Alexland

We went with 1 year loans and set them to reinvest in the rolling market incase they get repaid early. Once we have the £100 bonuses we will sell down to cash and transfer to S&S ISAs.

I keep thinking I am done with cashback deals and then I keep finding another one.... Sigh.