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Post by jamesmc on Dec 4, 2013 17:08:53 GMT
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andy2001
Member of DD Central
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Post by andy2001 on Dec 5, 2013 1:26:17 GMT
There been some mention of this on the old forum. It sounds like it may be only allowed at the lower amount. not the stocks and shares ISA.
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Post by westonkevRS on Dec 5, 2013 6:58:26 GMT
This is really interesting, as what I've learnt in this process is that the difference in ISA categories isn't a simple cash vs shares distinction. Products qualify based on their risk, simply is there a chance you could lose 5% of your money or not. So whilst we spend time saying how safe you are lending with P2P, on the other hand to qualify crowd based lending as equities ISA you suddenly have to explain how risky it could be! Today will clarify part of the governments decision....
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pikestaff
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Post by pikestaff on Dec 5, 2013 10:41:33 GMT
If this happens, it will be interesting to see how it is implemented by platforms. ISAs work best where you put your allowance in once a year. This is not well-suited to most platforms, where it is best to trickle the money into a number of investments over time. Will they need to invent new products to provide accelerated but diversified investment? However, it would seem to suit Ratesetter quite well. Perhaps no coincidence that they have been quick to post here  . |
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Post by batchoy on Dec 5, 2013 12:13:47 GMT
Unless I missed it or have overlooked it in the documents it doesn't appear to have happened, nor does the way P2P lending losses can be handled, nor the ability to transfer a CTF into a Junior ISA.
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Post by easteregg on Dec 5, 2013 12:52:35 GMT
There is a small note in the statement which states "the government is exploring whether to increase the number of retail binds eligible for stocks and shares ISAs..." but there is no mention of peer-to-peer lending or crowdfunding.
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jimbo
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Post by jimbo on Dec 5, 2013 13:11:18 GMT
P2B lending is a risky business. It is an investment, as you could lose all or part of your capital. To this end, it should be treated no differently to an investment ISA, complete with the same allowance. Making the allowance equivalent to that of a cash ISA is nonsensical, as it implies there is no risk.
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mikes1531
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Post by mikes1531 on Dec 6, 2013 20:38:50 GMT
Making the allowance equivalent to that of a cash ISA is nonsensical, as it implies there is no risk. I agree, but as westonkev said, they (RateSetter) have spent a lot of effort trying to convince lenders -- and everyone else -- that there's virtually no risk. And so has Zopa, particularly since they introduced the Safeguard Fund and started referring to lenders as 'savers'. I don't agree with that, and still consider myself as an investor with a potential risk, but I don't think I have any chance of convincing Zopa of that.
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Post by easteregg on Dec 7, 2013 20:59:23 GMT
Making the allowance equivalent to that of a cash ISA is nonsensical, as it implies there is no risk. I agree, but as westonkev said, they (RateSetter) have spent a lot of effort trying to convince lenders -- and everyone else -- that there's virtually no risk. And so has Zopa, particularly since they introduced the Safeguard Fund and started referring to lenders as 'savers'. I don't agree with that, and still consider myself as an investor with a potential risk, but I don't think I have any chance of convincing Zopa of that. I prefer the term "lender", which has much more risk than "saver" but less than "investor". RateSeter first introduced their provision fund to mitigate the risk to lenders, but not eliminate it. Zopa and others have come up with similar solutions, but I agree that there is always a risk.
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mikes1531
Member of DD Central
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Post by mikes1531 on Dec 7, 2013 22:16:30 GMT
I prefer the term "lender", which has much more risk than "saver" but less than "investor". RateSeter first introduced their provision fund to mitigate the risk to lenders, but not eliminate it. Zopa and others have come up with similar solutions, but I agree that there is always a risk. I'm happy with lender, too. It's "saver" that I really object to!
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jimbo
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Post by jimbo on Dec 8, 2013 0:17:12 GMT
I prefer the term "lender", which has much more risk than "saver" but less than "investor". RateSeter first introduced their provision fund to mitigate the risk to lenders, but not eliminate it. Zopa and others have come up with similar solutions, but I agree that there is always a risk. I don't see any difference between the two. For example, when you buy a bond, you're lending your money, but bond investment is just that; an investment. When I lend my money to a business, I do so on the basis I'll get a return. There is a risk I may not, and that I'll lose my money. Lending to businesses is not far off being as risky as buying shares in them from where I'm sitting. If the business folds, unless assets can be realised and I'm at the front of the creditor queue, I lose my money. This is especially true of small businesses, which may not have any tangible assets of any great worth on their balance sheets. I appreciate that lending money to individuals via Ratesetter and Zopa is perhaps not as risky, courtesy of the provision funds. However, in the event of a serious recession/depression and numerous individual bankruptcies, there is a risk the provision funds may not cover losses. We are investing here, and it comes with the associated risks attached. The only hope you can have regarding this form of investment being somehow less risky, is that if your loan portfolio is heavily diversified across a large base of borrowers, your losses may be cushioned. However, you will still be taking losses.
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Post by bracknellboy on Dec 8, 2013 6:29:28 GMT
Which in turn is similar to investing in either a "fund of funds" or a broad index tracker fund.
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james
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Post by james on Dec 14, 2013 3:52:41 GMT
I prefer the term "lender", which has much more risk than "saver" but less than "investor". RateSeter first introduced their provision fund to mitigate the risk to lenders, but not eliminate it. Zopa and others have come up with similar solutions, but I agree that there is always a risk. A FTSE All Share Index tracker can lost around 40-45% in a bad month. Zopa can lose you more than half of your capital in a few hours. All it takes is for A* rates to increase from sub-5% to the 9%+ from a few years ago, then have a need for your money and sell the loans. The buyer will get them at the current rate and to achieve that your selling price will be less than half of the outstanding value of your money. It's essentially the same sale risk as experienced by long duration bond investors in the same circumstances. We're perhaps three to four years away from this situation, since it'll require the end of QE and a more normal base rate than 0.5%. In all three cases the way you avoid the loss is by not selling while the mark to market return is low. Zopa doesn't report a mark to market portfolio value, so the variation is largely invisible to investors there. Selling is usually at the discretion of the owner of the loans so this should not allow Zopa to qualify for S&S ISA under the 5% test. Exceptions to discretionary may include potential or actual insolvency, divorce and death.
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