Guest Blog from @sloan_phil with Update to P2P

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Back in early 2017 my mate Phil wrote a couple of Guest Blogs about Peer-to-Peer (P2P) Lending which are very good as they describe in detail the ins and outs. Anyway, since then a lot has changed in the sector as it has matured and Phil has bashed out the following Guest Blog which updates where we are now. The original Blogs can be found at the Links below, and Big Thanks to Phil for providing this refresher,

Regards, WD.
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http://wheeliedealer.weebly.com/educational-blogs/guest-blog-peer-to-peer-lending-worthy-of-consideration-in-an-environment-of-low-interest-rates-and-rich-stockmarket-valuations

http://wheeliedealer.weebly.com/educational-blogs/guest-blog-from-phil-sloan-how-to-protect-your-p2p-earnings-from-tax-the-ifisa

As writer of the P2P guests blogs above, I thought I should do a little update a couple of years on and in doing so eat some humble pie !! At the time of writing, there was very good money to be made in P2P, and for a while that’s exactly what I did. However the landscape has certainly changed since then and with a ‘no deal’ Brexit now looming ever-larger, in my opinion the halcyon days of P2P have now gone.
 
With the benefit of hindsight the active-investment platforms with the higher-rated loans certainly were the riskier offerings and in many cases have failed the stress tests. Moneything, Ablrate, Collateral, Lendy etc. were all platforms that offered potential returns of 10%+, but as it turned out, this was usually for a reason !! Many of the loans on these platforms have since gone into default, thanks to unscrupulous or over-ambitious borrowers, with recoveries a lot less than expected in many cases.
 
I referred to platform risk in my original blogs, and in actual fact, both Lendy and Collateral have recently gone into administration. Whilst I chose to steer clear of investing in Lendy, I’ve most certainly caught a cold with Collateral. I believed the loans to be safe, secured against items of jewellery and precious metals (and they probably were), sadly though the platform was not !! It’s a complex case and one now involving an investigation into the FCA’s own conduct, as they falsely listed Collateral as a regulated and authorised company when in fact they were not, see this article:
 
https://www.telegraph.co.uk/investing/news/fca-register-flaw-incorrectly-marked-companies-authorised/
 
Had I known this was the case, I and I’m pretty sure many other investors, probably wouldn’t have invested in Collateral at all. The final outcome is still in the hands of the administrators, but I suspect I’ll lose a four-figure sum, putting quite a dent in my overall P2P profits.
 
So what am I doing now? For the past 12 months or so, I have been actively selling up most of my P2P loans and investments. The only platforms I still have interests in are the auto-investment offerings from Assetz Capital (IFISA), Ratesetter and Unbolted, plus Abundance, which bring in a blended yield of about 6.5% at present. 
 
I’m comfortable with my IFISA in Assetz Capital (for now), a platform that has made a profit for the last couple of years and is looking to float on the stock market in the future. I’ve a smaller amount in Ratesetter and am keeping a keen eye on the provision fund level. At Unbolted I’ve chosen to invest solely in gold pawn items, with the POG (Price of Gold) rising as it is, I feel the risk of losing out on any such loans is minimal, especially as they price-up the loans on the basis of the meltdown value of the jewellery. There is though an element of platform risk here, so my investment is limited. Finally, I have some money in the ‘green’ investment platform, Abundance, for that warm fuzzy feeling of doing my little bit for the planet. ?
 
Other than that, my former P2P money now sits in low interest, quick access accounts (eg. Santander & Markus Bank 1.5%), in readiness for stock market reinvestment, if/when we get the shakedown from a ‘no-deal’ Brexit. I suspect that just like last time, Mark Carney et al are over-egging the likely scenarios, so in any market panic, I will be buying not selling and will be happy to add additional capital to the stock market for the long term. Funds such as Fundsmith, Blue Whale Growth and Evenlode Income, as well as one or two other income paying investment trusts that offer similar levels of income to P2P auto-investment (but with the prospect of capital growth too) are where I intend to deploy my capital next.
 
Regards, Phil
@sloan_phil