Wellesley & Co have launched a new TV commercial for their peer-to-peer offering. Having secured their position as the 5th biggest peer-to-peer company in the UK (by capital outstanding), they are looking to continue their growth.
There is an interesting promise in the commercial:
Wellesley guarantee your rate they give you - it won't go down - ever.
Lets hope so!
There is a discussion on the Zopa Talk form and P2P Independent Forum concerning lending fees. A large minority of peer-to-peer companies, including Zopa and Funding Circle charge lenders a fee to use their services, but this fee is offset against interest. This effectively means that fees are not taxed.
Kevin Caley, Managing Director of ThinCats, stated on the P2P Independent Forum:
I attended a meeting between HMRC and the P2PFA today at which this was discussed (alongside the subject of using ISAs and the prospects for offsetting losses against interest income) but I think it will be some time before we see any changes to the rules. One interesting point to note is that if a platform charges you a fee for lending you cannot offset that cost against income for tax purposes. Zopa, Funding Circle, Ratesetter and several others charge lenders a fee and they are lobbying hard to get that changed but the response from HMRC was that they could bypass the problem by not charging lenders a fee!
Zopa confirmed their position that fees are currently exempt:
As it stands fees through Zopa are able to be offset against tax but bad debts cannot be offset against tax. Any future changes in lending fees or the tax treatment around lending will be communicated to customers. Both these the subjects are currently being discussed with HMRC
This puts lenders in a difficult position as they may already be locked into loans and cannot change their lending rate to offset any additional costs, however small. Lenders previously found themselves facing additional tax bills where it transpired that bad debt could not be offset against tax, where lenders had been lead to believe that it could.
Any "change" or "restatement" by HMRC is likely to force the peer-to-peer companies to move all costs to the borrower which wouldn't incur any additional taxation, but a growing number of P2P companies already do this. We would trust that HMRC would see sense, but if not then we would expect all peer-to-peer lenders to move to a fee-free model.
Wellesley & Co, one of leading second generation of peer-to-peer lending companies, has announced it is launching a mini-bond. The rates being offered (6-7%) are very similar to the existing lending rates through the Wellesley & Co lending platform.
Here is the full statement from Wellesley & Co:
- Wellesley Finance plc announced it is launching it's first mini-bond
- 6-7% per annum (gross) on terms of 3-5 years
- The bond will be released within several days
Important information: Before you subscribe to any Wellesley Savings Bond you should make sure you fully understand the risks which are set out in the Invitation Document and you should determine whether the investment is suitable for you on the basis of all the information contained in the Invitation Document. In the event that the company becomes insolvent, you may loose some of all of your investment. If you are in any doubt about the contents of the Invitation Document or the action you should take, you are strongly recommended to consult a professional financial adviser.
Landbay, one of the newer peer-to-peer companies, are offering 2% cashback on funds lent before 31st July. The interest rate for an A+ loan is currently 4% per annum over 3 year years, which is comparable with Zopa. Their A+ lending rates are a little less than some of the other peer-to-peer companies such as RateSetter and Funding Circle, but Landbay would argue that these loans are secured.
Here is their full statement:
Earn £10 for every £500 added to your account and lent out in the A+ band between now and 31st July 2014.
Landbay is offering our members £10 cashback for every £500 you deposit in your account. This will be added to your account for any funds deposited before 31st July. This offer only applies to funds added and offered to lend out in the A+ risk band*.
*This will not apply to funds offered at rates above our recommended range for A+ lending - currently up to 4.2%. Cashback will be added to your account on the 1st August. Maximum cashback per lender of £500. Cashback will be credited to your Landbay account.
RateSetter, one of the leading peer-to-peer companies, has published a survey of MoneyWeek readers on the topic of peer-to-peer lending. Interestingly 93% of respondents indicated they believed peer-to-peer offers better value than banks, and 87% believe peer-to-peer a good investment opportunity. Just under one third (32%) stated they had used peer-to-peer services, indicating that there is still significant untapped money to fuel the continuing growth within the sector.
Here are the full results courtesy of RateSetter: