What will Shake Up the UK Alternative Finance Market in 2015?

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Nick Moules
3rd February 2015

As news came through yesterday of LendInvest’s intention to debut on the London Stock Exchange later this year, we thought we would take a look at what might happen this year to our growing industry.

Will LendInvest be the only platform to float?

Probably not. Before the news broke, you might have favoured Q3 or Q4 for news like this, but the move is sure to get other platforms thinking about other ways to raise finance for their growth. Hot on the heels of Lending Club’s IPO in the States, it is a sign of the market moving mainstream and investors feeling increasingly confident in the stability of the asset class. If the float is successful, it automatically raises the value and the profile of the industry too.

On a personal note, the guys that run LendInvest have always been very personable with us, so we wish them the best of luck. We’re looking to take funding ourselves this year to accelerate our growth, but it probably won’t be through an IPO!

Will more freedom be introduced into pensions?

This is starting to happen, but much could hinge on the UK general election. Pensions are the proverbial political hot potato, but as the population gets older, there is concern about provision for old age and care costs. Throw in concerns about people frittering away lump sums or living too frugally, which is starting to affect the Australian economy, and it’s clear that more needs to be done to educate people. This could translate into more freedom of choice for those that have been suitably advised.

For example, Nutmeg, the online investment fund, has now offered a pension fund with a minimum of £5,000 starting balance. People can choose their risk profile and Nutmeg invests on their behalf. Returns are not guaranteed of course, but it does give people much better visibility of their investments and is probably a pre-cursor to deeper disruption in the market.

P2P remains a ‘non-standard’ asset, which means IFAs could invalidate their professional indemnity insurance by recommending it. 2015 might come a bit soon for this, but if enough investors apply pressure… We’ve seen results in tax and ISAs so why not pensions?

If you want to read more on what’s coming up, Hargreaves Lansdown has produced a factsheet you can download.

What about pan-European platforms?

Theoretically, yes. However, the individual regulatory regimes in different countries are certainly not on the same page. At a recent meeting of the UK Crowdfunding Association, it emerged that in Germany you are considered to be an institution if you make more than one loan. Given that Germany dictates a lot of policy in mainland Europe, it probably needs to take an approach similar to the FCA here to move things forward.

At present, you would spend incredible sums complying with regulation in each of the countries you want to operate in. Some have taken it on though. TrustBuddy is listed on the Swedish Stock Exchange and is now looking at the UK market, while Bondora does operate throughout Europe – we’re not sure how profitably at this stage…

What do you think? Would you lend to European businesses?

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