CITY veteran Nicola Horlick has said that, despite 33 years investing in the stock market as one of the UK’s top fund managers, she thinks peer-to-peer (P2P) is a “less risky” way to boost your income.
Horlick is founder and chief executive of Money & Co, a P2P lending firm that focuses on business loans and which is currently awaiting Financial Conduct Authority approval to offer an Innovative Finance ISA (IFISA). She argues that as Money & Co’s loans are secured against a company’s assets, investors have more protection than they would if betting on stocks and shares.
“If you’re an equity investor, whether it’s a listed company or a private company, you are the last person to get paid if something goes wrong,” she told Peer-to-Peer Finance News.
“So this is vastly safer than actually investing in equities. It’s not safer than investing in government gilts and it’s not safer than leaving your money in the bank, as the bank is too big to fail and the government will bail it out.
“But you’re getting so little in terms of return if you leave your money in the bank, that actually the difference in yield is so big that it’s worth taking that risk.”
Horlick predicts that the IFISA, which puts a tax-free wrapper around P2P investments, will give the industry “a much wider appeal”. Like some of the largest P2P platforms in the country, Money & Co is in the dark as to when exactly the FCA will approve its application, although she thinks it is “very unlikely” she will be able to offer the product before January.
“So we’re a bit stuck [on the IFISAs] and it’s very irritating,” she said. “The Treasury wanted to push it ahead really fast and then the FCA got involved and it all slowed up, so it was a bit annoying. But you know, we are talking about selling things to members of the public so it’s got to be properly regulated and properly thought through.”
For more on the IFISAs, keep an eye out the feature in the first monthly print edition of P2PFN, coming out on 3 October.