Investor
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Post by Investor on Feb 14, 2016 13:51:07 GMT
Given that the FCSC protection would add a level of security to any ISA investment, rounded to the nearest 0.5%, what premium would be your minimum requirement to select an ISA without protection over one that did have FCSC protection.
As a simple worked example, if you had some money currently in an ISA (with no early settlement penalty) at 1.5%, and you would be happy to transfer this to a non protected ISA at 2.4%, please respond with 1.0% as an answer (2.4-1.5=0.9 which rounds to 1.0)
Realistically this is with respect to a 'like for like' ISA and predominantly within the retail lending sector RS, ZP etc, rather than what many consider the higher risk, higher reward platforms.
Appreciate there are many other 'individual' factors, just trying to if there is a ball park consensus as to the premium load for the risk change
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ablender
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Post by ablender on Feb 14, 2016 14:25:23 GMT
The above figures are not enough. I will be looking at something close or greater than 12% interest.
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Investor
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Post by Investor on Feb 14, 2016 14:47:41 GMT
The above figures are not enough. I will be looking at something close or greater than 12% interest. I believe that is covered by the 6.5% or greater option, and good luck
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pikestaff
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Post by pikestaff on Feb 14, 2016 16:01:06 GMT
Too many variables. I think the answer to this question depends very much on what kind of P2P ISA we are talking about.
Since you asked for a minimum premium I have answered on the assumption that the P2P ISA is backed by a provision fund at least as robust as that offered by RS. However, I have ignored your "like for like" requirement becase your comparator is an instant access ISA. There are no P2P products which guarantee instant access, plus I have no interest in an instant access (or quick access) P2P ISA anyway.
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ablender
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Post by ablender on Feb 14, 2016 18:16:42 GMT
The above figures are not enough. I will be looking at something close or greater than 12% interest. I believe that is covered by the 6.5% or greater option, and good luck As long as it does not mean that I am happy with something like 8%, I am putting my vote for the 6.5% or greater.
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Post by trentenders on Feb 14, 2016 18:22:20 GMT
I assumed the question was about the premium I'd want to take FSCS protection away i.e. If I'd take an ISA with at 4%, but without at 7%, my premium would be 4%....
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mikes1531
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Post by mikes1531 on Feb 14, 2016 19:39:01 GMT
I assumed the question was about the premium I'd want to take FSCS protection away i.e. If I'd take an ISA with at 4%, but without at 7%, my premium would be 4%.... : That looks like a 3% premium to me.
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Post by trentenders on Feb 14, 2016 20:34:10 GMT
3 lol.
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Post by newlender on Feb 14, 2016 20:45:05 GMT
If I get 6% on a 5 year loan now I'd want to keep that at the very least, but tax free. So it's 4% in my case. Halifax are offering a 5 year ISA fix at 2%, which gives about the same differential. Where does the OP get the 2.4% figure from anyway?
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ablender
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Post by ablender on Feb 15, 2016 8:06:16 GMT
I cannot understand the figures you are using. If currently I am lending on various P2P platforms and am getting 12%, I aim to get the same 12% when investing on the same platforms through ISA. After all the ISA allows me to benefit from the tax and should not be cannibalised by others. Currently I am not paying my bank anything to have any of my bank accounts and profitable platforms already earn enough to cover the costs.
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ben
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Post by ben on Feb 15, 2016 8:30:07 GMT
I cannot understand the figures you are using. If currently I am lending on various P2P platforms and am getting 12%, I aim to get the same 12% when investing on the same platforms through ISA. After all the ISA allows me to benefit from the tax and should not be cannibalised by others. Currently I am not paying my bank anything to have any of my bank accounts and profitable platforms already earn enough to cover the costs. I agree with you about the costs however I only have one normal still not sure why but I do which pays me less interest then my bank account does and I pay higher rate tax on that. So I bet the ISA account will not carry on paying you 12%
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ablender
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Post by ablender on Feb 15, 2016 8:48:21 GMT
I cannot understand the figures you are using. If currently I am lending on various P2P platforms and am getting 12%, I aim to get the same 12% when investing on the same platforms through ISA. After all the ISA allows me to benefit from the tax and should not be cannibalised by others. Currently I am not paying my bank anything to have any of my bank accounts and profitable platforms already earn enough to cover the costs. I agree with you about the costs however I only have one normal still not sure why but I do which pays me less interest then my bank account does and I pay higher rate tax on that. So I bet the ISA account will not carry on paying you 12% Sorry, did not understand your post. Can you clarify please? "So I bet the ISA account will not carry on paying you 12%" I am not talking about a cash ISA (bank) but P2P (IFISA) when I refer to 12%.
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pikestaff
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Post by pikestaff on Feb 15, 2016 9:03:52 GMT
I cannot understand the figures you are using. If currently I am lending on various P2P platforms and am getting 12%, I aim to get the same 12% when investing on the same platforms through ISA. After all the ISA allows me to benefit from the tax and should not be cannibalised by others. Currently I am not paying my bank anything to have any of my bank accounts and profitable platforms already earn enough to cover the costs. It's your choice to use the highest paying platforms, and good luck to you. What you are saying is that you hope those platforms will offer an ISA, and that their rates will not go down as a result. This depends not only on their margin but also on supply and demand. It may not be realistic to expect rates to remain at 12% if demand from lenders shoots up as a result of offering an ISA. Can they find enough borrowers willing to pay their high rates and will those borrowers be creditworthy? I personally doubt that all of the platforms offering 12% will make it through to full authorisation, and not all of those that do will necessarily offer an ISA. They may well feel that they are already doing all the business that they can cope with.
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ablender
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Post by ablender on Feb 15, 2016 10:24:49 GMT
I cannot understand the figures you are using. If currently I am lending on various P2P platforms and am getting 12%, I aim to get the same 12% when investing on the same platforms through ISA. After all the ISA allows me to benefit from the tax and should not be cannibalised by others. Currently I am not paying my bank anything to have any of my bank accounts and profitable platforms already earn enough to cover the costs. It's your choice to use the highest paying platforms, and good luck to you. What you are saying is that you hope those platforms will offer an ISA, and that their rates will not go down as a result. This depends not only on their margin but also on supply and demand. It may not be realistic to expect rates to remain at 12% if demand from lenders shoots up as a result of offering an ISA. Can they find enough borrowers willing to pay their high rates and will those borrowers be creditworthy? I personally doubt that all of the platforms offering 12% will make it through to full authorisation, and not all of those that do will necessarily offer an ISA. They may well feel that they are already doing all the business that they can cope with. Then it might mean that I have to decide between let us say an 8% ISA vs 12% non-ISA (for which I pay 20% tax = c10% if I am doing the maths correctly), and for which the first £1000 of interest is not taxed. Can someone check my working?
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pikestaff
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Post by pikestaff on Feb 15, 2016 10:46:10 GMT
You are right in principle, but I'd expect you to be able to beat 8% in an P2P ISA even if the top paying platforms don't offer one.
Time will tell. If there's a massive influx of lender money it will drive rates down across the board and the likes of SS will have to cut their rates as well, to compete for borrowers.
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