LCF isa
nickjones44
Posts: 1 Newbie
Hi does anybody know if the LCF ( London Capital and Finance ) isa is legit as there offering 8% for a fixed 3yrs as I was thinking of opening one with them ....BR Nick
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They are probably legit, but it's just an investment. Your money isn't protected. If you are looking for something similar to a cash ISA then this isn't it.Investing in bonds means your capital is at risk and payments are not guaranteed if borrowers default0
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Provided you accept the risk of 100% loss it's fine. I prefer my chances elsewhere.0
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nickjones44 wrote: »Hi does anybody know if the LCF ( London Capital and Finance ) isa is legit as there offering 8% for a fixed 3yrs as I was thinking of opening one with them ....BR Nick
It is legit but its more likely that you do not understand what it is and are mistaking it for something it isnt.
It is not a savings account.
It is not a fixed term deposit
It is not a retail investment product/fund.
it has no FSCS protection
It is a high risk unregulated investment with 100% loss potential.
For context, you can place it as higher risk than a FTSE tracker.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Hello yet another brand new poster asking about London Capital and Finance!
I suspect that you already know the answer to your question.0 -
London Capital and Finance, LC&F or recently LCF now offer the LC&F corporate mini-bond debt finance investment under the HMRC Innovative Finance ISA (IFISA) wrapper which means LCF will pay interest gross to bondholders not net, so qualifying investors do not have to claim the interest back each tax year from HMRC which can be time consuming.
In 2016 the Innovative Finance ISA (IFISA) was introduced by HMRC to allow P2P lending to come within the ISA wrapper. Within a few months the press reported the number of investors in P2P doubled, accredited to the higher status given by the HMRC ISA wrapper. Later other investment vehicles including debt finance, bonds, debentures were also included within an IFISA. This is the vehicle that LC&F offers.
The HMRC website lays out the eligibility for a provider to act as an ISA Manager. The website also lists all approved ISA Managers. The HMRC do not approve the financial product. It is in the interest of a bond provider to offer the investment as an IFISA as it will give a boost to investment and interest will not have to be claimed back by investors.
However, opening up the ISA wrapper, namely IFISA, to a greater diversity of financial products may mean more smaller startup businesses selling riskier debt finance investments, mini-bonds, loan notes or bonds taking advantage of the boost in status given. This can be a good thing if the business succeeds, but small companies often do not because of underlying weaknesses in finance, mismanagement, inexperience, competition, risk, etc. However, to quote, the destiny of every company is to either go bankrupt or be taken over.
The HMRC do not assess or approve the financial product in the area of debt finance in the application of the issuer to HMRC to become an ISA Manager. This means that a large financial institution offering a regulated financial product, as well as a very small commercial company offering an unregulated financial product, can both be operated under an ISA wrapper as long as ISA Manager criteria are met.
Re granting ISA wrapper status to an ISA Manager applicant it appears to not make any difference that the applicant, individual or company, has assets matched by liabilities, single digit officers and employees, little cash, little experience or expertise or track record, nor that it refuses to provide commercial due diligence to pre and post sales customers. That is, the very searches essential pre-investment re a company: commercial due diligence, financial due diligence are not involved in HMRC assessment.
It is true that being an ISA Manager managing an ISA wrapped financial product greatly increases sales, but it does not mean that the product has been approved by the HMRC.
It is also confusing to savers searching for a better savings interest rate that the very word ISA or Individual Savings Account contains the word "savings" even when it refers to "investments" as in a Stocks and Shares ISA or an Innovative Finance ISA. Perhaps when referring to an investment ISA the name Individual Savings Account or ISA could be changed to Individual Investment Account or IIA, but that would need parliamentary approval and the abbreviation does not eactly roll off the tongue well.
For reference, I have not yet updated the London Capital and Finance Mini-Bond Review on the weebly.com website so there is no further info yet on the LC&F IFISA in the review.
For further information on the risks in relation to the new Innovative Isa category visit:
https://www.theguardian.com/money/2017/feb/18/innovative-finance-isa-tax-free-high-returns-risky0 -
It is legit but its more likely that you do not understand what it is and are mistaking it for something it isnt.
It is not a savings account.
https://en.m.wikibooks.org/wiki/Macroeconomics/Savings_and_Investment
"Investment
Investment is made into capital (ie. plant and machinery, also 'human capital' - training and education), with intent to increase productivity, efficiency and output of goods and services.
In national accounting terms, stocks, bonds, mutual funds, and other items whose value is risky, are NOT investments. They fall into the savings account, not the investment account.
In monetary terms, the relationship between savings and investment is modeled, rather than being an accounting identity. Stocks and bonds are considered to be important intermediary forms of savings as it gets transformed into a capital investment that produces value. Mutual funds, CDs, BICs, GICs, pension obligations, insurance annuities, and other forms of savings marketed by financial intermediaries, all consist of stocks, bonds, and cash balances, which in turn pay for the capital that increases productivity, efficiency and output of goods and services."
Having read the above and more, I am even more confused and puzzled on the distinction between savings and investments accounts. It may be that what I said about ISAs in my post above re designating investments and savings as different is inaccurate in the sense of depending how the two are looked at and in what context. The distnction between savings and investments is somewhat clearer if looked at from the simple reference to applicability of insurance protection under the FSCS as long as the FSCS criteria are met by the financial institution.
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OK Mr Bowlhead99, thankyou for reminding me or should I say, if I dare, revealing to me, and other readers the distinction between economics and macroeconomics. From websites we have the following definition of 'savings' etc in economics.
What are Savings?
Savings, according to Keynesian economics, are what a person has left over when the cost of his or her consumer expenditure is subtracted from the amount of disposable income earned in a given period of time. For those who are financially prudent, the amount of money left over after personal expenses have been met can be positive; for those who tend to rely on credit and loans to make ends meet, there is no money left for savings. Savings can be used to increase income through investing in different investments.
Investopedia
What is Saving?
Saving is income not spent, or deferred consumption. Methods of saving include putting money aside in, for example, a deposit account, a pension account, an investment fund, or as cash. Saving also involves reducing expenditures, such as recurring costs.
Saving - Wikipedia
https://en.wikipedia.org !!!8250; wiki !!!8250; Saving
What is a savings account?
A savings account is an interest-bearing deposit account held at a bank or another financial institution that provides a modest interest rate. The financial institutions may limit the number of withdrawals you can make from your savings account each month. They also may charge fees unless you maintain a certain average monthly balance in the account. In most cases, banks do not provide checks with savings accounts.
Read more: Savings Account https://www.investopedia.com/terms/s/savingsaccount.asp#ixzz5L9Yt3eWJ
What is Investment?
This article is about investment in finance. For investment in macroeconomics, see Investment (macroeconomics). For other uses, see Investment (disambiguation).
"Invest" redirects here. For the term in meteorology, see Invest (meteorology).
In general, to invest is to allocate money (or sometimes another resource, such as time) in the expectation of some benefit in the future !!!8211; for example, investment in durable goods, in real estate by the service industry, in factories for manufacturing, in product development, and in research and development. However, this article focuses specifically on investment in financial assets.
In finance, the benefit from investment is called a return. The return may consist of capital gains or investment income, including dividends, interest, rental income etc., or a combination of the two. The projected economic return is the appropriately discounted value of the future returns. The historic return comprises the actual capital gain (or loss) or income (or both) over a period of time.
Investors generally expect higher returns from riskier investments. Financial assets range from low-risk, low-return investments, such as high-grade government bonds, to those with higher risk and higher expected commensurate reward, such as emerging markets stock investments.
Investors, particularly novices, are often advised to adopt a particular investment strategy and diversify their portfolio. Diversification has the statistical effect of reducing overall risk.
https://en.m.wikipedia.org/wiki/Investment
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Niche groups may define words quite differently than they are used in common parlance. Here in the UK, the term 'savings' is regulated and cannot be used to describe something that carries risk of loss of capital. A P2P lender of note was forced to change its name because it contained the word 'Saving', and advertising is considered misleading if it associates risky investments with savings. Hence the whole financial industry in the UK defines savings as cash held in a deposit account.Having read the above and more, I am even more confused and puzzled on the distinction between savings and investments accounts. It may be that what I said about ISAs in my post above re designating investments and savings as different is inaccurate in the sense of depending how the two are looked at and in what context. The distnction between savings and investments is somewhat clearer if looked at from the simple reference to applicability of insurance protection under the FSCS as long as the FSCS criteria are met by the financial institution.
I believe the distinction between savings and investments on this forum arises in part due to MSE not being authorised to promote non-savings investments. The forum is also frequented by individuals working within financial services who also make this distinction.
Coming back to the topic at hand: these mini-bonds are often misrepresented to the public and are generally best avoided by pretty much anyone. The threads, almost always started by brand new posters, are a good opportunity for the regulars to use the words "barge" and "pole", before the shills get to work trying to market them to the unwary.0 -
The following website links are useful for descriptions of savings accounts, different types of savings products, security and associated risks:
https://www.moneyadviceservice.org.uk/en/categories/savings-types
https://www.moneyadviceservice.org.uk/en/articles/cash-savings-bonds
https://www.moneyadviceservice.org.uk/en/articles/cash-savings-bonds#are-savings-bonds-safe-and-secure
https://www.moneyadviceservice.org.uk/en/articles/structured-deposits-and-investment-products
https://www.moneyadviceservice.org.uk/en/articles/structured-deposits-and-investment-products#risk-of-structured-products0 -
Here in the UK, the term 'savings' is regulated and cannot be used to describe something that carries risk of loss of capital. A P2P lender of note was forced to change its name because it contained the word 'Saving', and advertising is considered misleading if it associates risky investments with savings.
Out of interest, is there an official FCA statement on the use of the word "savings"?
I can think of at least one other ultra-high-risk unregulated investment that is using the word "savings" in its adverts with impunity.0 -
From the FCA Handbook glossary of terms:
"savings account
an account, other than an account relating to a structured deposit, held for a banking customer:
(a) on terms that interest or a dividend is to be paid on money standing to the credit of the account; and
(b) which is not used for the execution of day-to-day payment transactions to third parties."
Also visit:
https://www.gov.uk/hmrc-internal-manuals/savings-and-investment-manual/saim20100
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