When it comes to investing, there are numerous questions that need to be asked, and lots of things which need to be properly understood before committing your hard-earned money
2015: A massive year for Lending Works and P2P lending
No matter which way you spin it, 2015 has been a historic year for both Lending Works and the peer-to-peer lending (P2P) industry as a whole. On a personal level, we’ve been thrilled to see our platform go from strength to strength which is thanks in no small part to our customers. Yet our industry has also been given plenty of encouragement by both Government and regulators, with many landmark events and rulings to digest along the way.
So, with these in mind, we thought we’d do a review of a year which we’ll no doubt look back on with great fondness…
Innovative Finance ISA
The July Budget was unquestionably the seminal moment of 2015 for the UK’s P2P sector. Having held our breath since the 2014 Budget – where it was confirmed that P2P would be included within the ISA framework – HMT revealed on 8th July that a new third-way Innovative Finance ISA (IFISA) would be available from April 2016, and that consumers would be able to hold peer-to-peer loans within this new account in order to benefit from tax-free returns on interest paid by borrowers.
There remain one or two ambiguities under consultation, such as whether pre-existing P2P loans will be eligible for transfer, and whether platforms still under an interim FCA permission will be able to offer IFISAs when they go live. However, such technicalities haven’t taken the shine off a breakthrough announcement which is set to see the industry swell to £50 billion by 2018.
Pension freedom
It was hailed as one of George Osborne’s finest hours as Chancellor. From 6 April, those over the age of 55 had the shackles broken to the previously-mandatory annuity, meaning they could draw down as much of their pension as they pleased.
It’s fair to say that the reforms haven’t been without their teething issues, not to mention risks. However, it’s unquestionably resulted in a windfall for the peer-to-peer lending sector, with savvy pensioners having since put their faith in P2P platforms as a suitable investment option within their retirement portfolios. At Lending Works, we saw the share of capital from these ‘silver lenders’ double in the first three months following the arrival of the freedoms, and this trend has since continued. We’ve also seen a dramatic gravitation towards making use of our Auto Income tool, suggesting the will among our over 55s to use P2P lending as an income device.
Regulation
Lending Works, like most other platforms, has been operating under an interim FCA permission since April 2014. However, all platforms had until 31 October this year to submit their applications for full authorisation. It was an exhaustive and expensive process but, as an industry, it was something we embraced, as being held to account to the highest level of financial and operating standards will weed out platforms not fit for purpose, and strengthen P2P as a whole as confidence among investors continues to rise.
In addition, the nine-strong Peer to Peer Finance Association – of which we are a member – recently updated its ‘Operating Principles’ to improve the level of transparency among its members. One such change was making it mandatory for platforms to display detailed statistics on risk and return, while also making their loan books available for download on their websites. Lending Works has duly obliged with the launch of our new Statistics pages, and we’re proud to give consumers the opportunity to make completely informed decisions before choosing to lend with us.
Lending Works
Well, what can we say… it’s been a fantastic year for us here too! In 2015, we’ve nearly quadrupled on the amount we lent last year, with every penny due to our lenders being received – and on time. As a result, our team has doubled in size requiring us to upgrade to some plush new offices.
In June, we also received the prestigious honour of ‘Highly Commended’ as Most Trusted Personal Loan Provider at the 2015 Moneywise Customer Service Awards, just a year after our launch, beating off competition from the high street banks and building societies. However, we haven’t rested on our laurels, and have since improved our website, launched our Auto Income and Retirement Income Calculator tools, released our Help Centre and a whole lot more in order to deliver the best possible customer experience.
Looking into the crystal ball
So, what does next year have in store for us? IFISA will no doubt be the main event for both current and future lenders, and the inevitable influx of lender capital will be fascinating to observe, and rewarding for all involved. At a company level, we’re also launching some exciting new initiatives including some significant new partnerships, and you can expect a few other announcements from us in the coming months too.
It all bodes well for an even better 2016, in which we expect to see Lending Works and peer-to-peer lending in the UK soar to dizzy heights. We certainly hope you’ll see fit to join us for what should be a hugely enjoyable ride.
Merry Christmas and a happy new year to you all!
Related articles:
- The Innovative Finance ISA debt vs equity conundrum
- P2P: A silver lining for base rate misery
- Innovative Finance ISA: The good and the 'bad'
Get email updates for future blogs:
Our website offers information about saving, investing, tax and other financial matters, but not personal advice. If you're not sure whether peer-to-peer lending is right for you, please seek independent financial advice, and if you decide to invest with Lending Works, please read our Key Lender Information PDF first.
As with all investments, your capital is at risk.
For all the resilience the UK economy has shown, there is no doubt that this year's ISA season is set against a backdrop of uncertainty. Whatever the pros and cons, Brexit, and a lack of clarity on what our future economic relationship with the EU will look like, has left us at a crossroads.
The housing crisis in the UK is widely mentioned in the media, but the extent of it is often underestimated.
The Lifetime ISA (LISA), announced in 2016, would prove to be one of George Osborne’s last flagship gestures to UK savers and investors as Chancellor, eventually launching against a backdrop of anti-climax a year later in April 2017.
As the tax year end approaches, the financial services industry readies itself for a flurry of activity. That's in large part because, with just a couple of months to go, the so-called 'ISA season' is upon us.
Featured
Over the last decade, there can be little dispute that the reputation of mainstream banks – and particularly the so-called ‘Big Four’ (HSBC, Barclays, Lloyds and RBS) – is at its lowest ebb.
The idea of peer-to-peer (P2P) lending is a simple one; you lend money to those who wish to borrow, with a view to receiving a great return for doing so.
The peer-to-peer (P2P) lending industry is now regulated by the Financial Conduct Authority (FCA). The regulatory framework has been designed to protect customers and promote effective competition.
Loan underwriting is the process that we undertake to analyse all of the information provided by each loan applicant and their credit file to assess whether or not that applicant meets our minimum loan criteria. As part of that process all data is verified, analysed and summarised to paint a picture of each applicant.
When you earn interest from a regular bank savings account, for example, the bank automatically deducts basic rate tax (currently 20%) before paying your interest. With interest earned from peer-to-peer lending, tax is not deducted automatically so lenders will need to declare their income to HMRC.
Most popular
The starting gun has been fired to seek out Mark Carney's successor as Governor of the Bank of England (BoE), but he will nevertheless remain in his post until January 2020.
The vexing issue of social care, set against a backdrop of an ageing population trying to sustain itself, refuses to go away, and policy ideas invariably prove divisive.
On a daily basis, diligent readers of financial publications consume a wide range of economic data, which act as key performance indicators regarding the state of the UK economy.
On 13th January, the open banking era completed its first year in existence, so it represents a natural juncture to reflect upon the past 12 months
Perhaps the word 'fanfare' would be overstating the recent response to an uptick in UK savings rates.
Clearly there is one story which is dominating the headlines at the moment: Brexit.
