Money&Co Launches IF ISA
Money&Co. has become the latest peer-to-peer lending platform (P2P) to offer the Innovative Finance ISA (IF ISA) to UK retail investors. The P2P lender and IF ISA provider will offer a three year fixed rate IF ISA based on A+ rated loans secured on residential property. The interest rate will be one of the most competitive, in comparison to other IF ISA providers, returning 7% per annum net of fees.
Money&Co's CEO, Nicola Horlick, identified 2017 as being the year when the 'big flood' of IF ISAs will arrive. Her business lending platform which facilitates investment in UK SMEs progressed swiftly from full FCA authorisation in February to being HMRC ISA plan manager approved within weeks. For the P2P lending market, and particularly smaller, new entrant platforms, this signals a positive move as the regulator starts reducing the queue of providers seeking authorisation.
Nicola expects asset-backed loans will attract a broader demographic to P2P lending:
We believe that loans with asset backing will be particularly attractive to ISA investors.
Investors can manually select creditworthy businesses to invest in, across the Money&Co platform. The P2P lender vets borrowers and applies a credit rating (E.G: A+, A, B) - at a minimum, companies are expected to provide 3 year's accounts and be profitable. A debenture is then taken on the company's assets, to secure the loan. Once approved, the borrower is listed on the website. Investors can then browse companies and bid on a portion of the loan - this is an auction process. Once the auction is closed, returns will start to generate.
With the Money&Co ISA the interest is a fixed 7% p.a.
One thing is certain, 2017 could very well be the year of the IF ISA "flood". We've seen almost three times as many platforms launch Innovative Finance ISAs in 2017 as was seen in 2016. There are now seven P2P lending platforms (by definition) with IF ISAs on the market and several that are fully authorised, with more IF ISAs expected imminently. For more information on which P2P providers offer IF ISAs, visit our IFISA Tracker page.