Alternative lenders berate Chancellor for ineffective first budget
Source: Andrej Klizan, https://goo.gl/hW4c0M
Peer-to-peer lending boss calls budget “one of the least interesting” in recent times.
Stuart Law, CEO and co-founder of secured business lending platform Assetz Capital, has berated Philip Hammond for delivering no news of any import for small businesses – “or indeed their lenders” – in his first budget as Chancellor.
Law said that Hammond has missed a chance to remove a “fatal flaw” from the Innovative Finance ISA tax wrapper, which allows investors to shelter peer-to-peer investments from income tax. The existing rules do not allow investors to spread their annual ISA allowance across multiple peer-to-peer platforms, which Law believes is making diversification “very difficult”.
Third party solutions such as investment platform Goji are attempting to offer investors an aggregated solution to this, but Law clearly believes that the Treasury is missing a trick by allowing the problem to persist.
The IFISA is currently being offered by a number of small and medium sized peer-to-peer lending platforms. The very largest players in the market are not yet fully authorised, and cannot seek ISA manager permissions from HMRC until they are.
Law went on to argue that the Chancellor cannot afford to be vague while the shadow of Brexit hangs over the nation’s peer-to-peer lenders.
“Eight months have now passed since the Brexit vote, and even after today’s budget, businesses and investors are none the wiser on what the long-term implications will be,” he said. “Like other sectors, the P2P market needs a clear strategy outlined by the Government so that we can plan accordingly.”
Alex Fenton, founder and CEO of alternative lender GapCap, seems to echo Law’s sentiments. “This was a timely opportunity for the Government to underpin its support for small businesses, yet they have taken half-measures at best,” he said.
Fenton believes the upcoming hike in business rates will prove a critical juncture for the UK’s small businesses, and although Hammond has promised protections, there are doubts as to whether he will deliver.
“It remains to be seen whether Government delivers on what has been stated in today’s budget to support SMEs – the oxygen for the lifeblood of the economy seems to be thinning,” he said.
The Treasury and Philip Hammond’s stance on fintech and alternative finance has been the subject of much discussion since the dismissal of former Chancellor George Osborne. Many are anxious to see just how fervently the new administration will look to uphold the UK’s reputation as “fintech capital of the world”.
The Treasury recently unveiled plans for a UK fintech investment conference in early April – for some allaying fears that fintech had fallen by the wayside under Hammond's regime. But with no good news in today’s budget, the UK’s alternative lenders are back to biting their nails once more.