london capital and finance

ashleyj722 wrote: »

This is a peer to peer lending platform in a different form.

Well, quite a different form.

It's not 'peer to peer' lending really because that phrasing came about from the fact that certain intermediary firms would set you up to be able to lend parts of a loan direct to borrowers, while they made the introduction and facilitated your lending money to your peers who wanted to borrow it through the P2P firm's platform. Peer to Peer is unlike a traditional investment fund or bank deposit, n which you invest or deposit into a product and the person recieving it independently invests the received money and gets a return to allow them to, in turn, pay you a return. P2P is a different class of investment altogether.

By contrast, this investment *doesn't* purport to be hooking you up with borrowers who want to directly borrow your money and cut out the middleman (other than for a bit of administration and cost of providing the platform service in the middle).

Instead, you commit money blindly by buying a bond directly issued by a private company. That private company will use your money however it wants in its own business plan to lend money to people who want it (about whom you know nothing in terms of creditworthiness, interest rate, why they want the money) and if they make enough money to pay you back and not go bust, they say they will pay you back.

But you are not lending semi-directly to borrowers coordinated by some kind of regulated investment platform here. You are just lending directly to a company who says they will use your money cleverly and give it you back if they and their guarantee company are still in business later, on the promise of higher rates than you might get from some investments that wasn't so very risky.

So, not really "peer to peer in a different form". It's one of the oldest forms going- just lending money to a company to use in their business and crossing one's fingers in the hope you'll get it back with a lucrative return.

For a £20k investment, your father won't really have been able to pay anyone to do sufficient independent professional due diligence to determine the company's track record or the chances of getting his money back. He just got suckered in by reading the high rate, but doesn't want to be talked out of it because like many, he has some personal pride and will be happy if it works out like he blindly hopess it will.

Unfortunately I tried to explain the risk of investing in this company to my Father who has just ploughed his full ISA tax allowance into this company for a 8% return 3 year fixed. He doesn't seem to care when I explained that this is not a savings ISA, but a investment scheme and that it's not regulated by the FSA. or protected. Nevertheless, he is supposed to get a interest payment every quarter.

Good luck to him, it would be nice to think he will get all those payments and all the principal back at the end, but other investments would likely have a better payoff for the same risk (or same sort of return for lower risk). Please let us know in three years