What Peer to Peer Lenders Should Be Telling Their Investors – In Our Opinion...
(Capital at risk - Past performance is not an indicator of future results. Not protected by the Financial Services Compensation Scheme (FSCS). Money invested through easyMoney is concentrated in property and could be affected by market conditions. For the same reason, instant access cannot be guaranteed. We do not offer investment or tax advice. Please note that the parameters contained in this blog are subject to change as our business evolves).
When we speak to would-be investors about our P2P lending platform, there tend to be several questions that keep coming up (have a look at our FAQs page, here). Don’t be in the dark. The team here at easyMoney is always pleased to answer your queries, so don’t hesitate to get in touch if you’re not sure about something.
And, it must be said: there IS no such thing as a stupid question. Forewarned is forearmed. We think that if you’re fully informed, you’re likely to be much more comfortable about investing with us.
Coupled with the fact that Innovative Finance Individual Savings Accounts (or IFISAs) are still relatively new in the marketplace – having been introduced in 2016/17 – this fresh, different way of investing will always need a full balanced explanation about how it works. As the name suggests, they’re innovative. And, they’re not cash savings accounts (your capital is at risk and you are not covered by the Financial Services Compensation Scheme) – an IFISA offers you ways to invest in peer-to-peer loans within a tax-free wrapper.
So, it works both ways: we’ll always communicate clearly with you as part of the process.
Today’s blog is about the 6 key things that we think P2P lending platforms should be telling investors. In other words, the pro-active information should always go beyond the obvious. At easyMoney, our culture is about openness and transparency, please note we are not allowed to give you financial advice and you should always consult your own financial advisor before you invest.
The most obvious point is the first:
Explain Exactly How an IFISA Works
With an IFISA from easyMoney, you can invest up to £20,000 tax-free annually or transfer your existing ISA. The money you invest can be as little as £100 with interest within the £20k annual allowance paid back to you on a monthly basis without you owing HMRC any tax.
Our focus is on property, and we will invest your money in loans backed by UK property. In a nutshell, we will match you as a lender to a carefully selected number of property professionals, either looking for funds for bridging loans, property development projects, or both.
1) Be Clear About Likely Returns
According to Which?, the property sector is on the up ( https://www.which.co.uk/news/2021/07/how-will-the-coronavirus-affect-house-prices/); a robust construction industry is generally seen as having a positive, meaningful impact on the UK economy – which in turn provokes a healthy market for property development.
Whilst returns are never guaranteed (see our section on risk below), with easyMoney you could benefit from target rates of between 3.08 to 8% p.a., depending on how much money you are willing to invest.
2) Be Clear About Who You Will be Lending To
With over 40 years of experience in real estate, our Chief Executive, Andrew de Candole has a wealth of in-depth experience and knowledge; his expertise has enabled him to gather a team of like-minded property experts ready to help potential investors like you, to make the most out of your investment.
The easyMoney team fully understands this complex area of business, and also collaborates closely with individuals and businesses looking to borrow for property projects.
3) Manage Your Client’s Expectations
We’ll talk you through the entire process, but please note we are not allowed to give financial advice.
There may be a period of time between your money being held in cash and easyMoney allocating it to the loans on our platform. This is called cash drag and could happen when you place your first investment with us. So, it won’t be earning interest to start with this case.
4) Be Clear About Risk
Investments can never be risk-free.
You should never invest money if you can’t afford to lose it and you should always consult independent advice before making an investment.
Our role is to communicate the risks before you invest so that you’re fully aware of all scenarios.
However, to reassure you: easyMoney has never made a loss on any of our loans. Equally, whilst your capital isn’t covered by the Financial Services Compensation Scheme, you should know that we have full authorisation to trade as a P2P platform from the Financial Conduct Authority.
5) Use Clear, Jargon-Free Communication
It stands to reason that a business called easyMoney should be easy to deal with.
If we have to use “technical” terms, we’ll always explain them.
6) Be Honest and Transparent
We won’t shy away from the facts. You’ll know everything you need to know.
We want to keep you as a customer, and of course - to recommend us to others.
Do get in touch for more information about our IFISAs and how they could work for you.
All the facts and figures presented are accurate at the time of posting.
easyMoney is not a cash savings account. You may not get back the full amount you put in. Your capital is at risk if you invest. Peer-to-peer investments are eligible for an Innovative Finance ISA which is not a Cash ISA. They are not protected by the Financial Services Compensation Scheme (FSCS). Money invested through easyMoney is concentrated in property and could be affected by market conditions. For the same reason, instant access cannot be guaranteed. We do not offer investment or tax advice.
easyMoney is the trading name of E-money Capital Ltd, a company incorporated in England & Wales. Registered office is 5 Fleet Place, London, England, EC4M 7RD (Company No. 04861007). E-money Capital Ltd is authorised and regulated by the Financial Conduct Authority (FCA) #231680.