Pensions  

Sipp deals loom for alternative lender ahead of freedoms

Sipp deals loom for alternative lender ahead of freedoms

Peer-to-peer lending platform Ratesetter is close to launching in the retirement space with four self-invested pension firms, as it seeks to boost its pensions presence ahead of the reforms coming into force in April.

Ceri Williams, business development manager at the firm, told FTAdviser it is “very, very close” to a deal with two providers, with two more likely to follow before the end of the second quarter.

Due diligence has been completed and a fee structure agreed, with work commencing on technological integration, he explained.

Peer-to-peer lenders, which facilitate the provision of loans from consumers to other borrowers, were thought to have been hampered in efforts to expand into the Sipps market by new capital adequacy rules, which classify the investments as ‘non-standard’ and thus costly for providers to offer.

However, new pension freedoms coming into force from next April are forcing firms to offer a wider array of investment and income options to clients who are no longer restricted in when or how they access their pension.

FTAdviser sister newspaper the Financial Times reported in June that the first ever peer-to-peer Sipp partnership had been signed between lending platform ThinCats and financial portal SippClub. At the time Rhydian Lewis, founder and chief executive of Ratesetter, told the FT there is “huge demand”.

Mr Williams said that the retirement market was now “more exciting” for the peer-to-peer market than Isas, which will soon also be able to hold the loans after rule changes in October which are still under consultation.

Among other legislative changes designed to boost the sector, in December’s Autumn Statement the government announced plans to include a new bad debt relief for lending through P2P platforms, extend Isa eligibility to lenders using debt-based securities and review opening up institutional lending through P2P portals.

According to data from innovation charity Nesta, backed by Cambridge University, PwC and Acca, the level of P2P business lending had increased by 250 per cent since 2012 through the first three quarters of 2014 and was set to top £1bn.

Earlier last year, Ratesetter announced it was targeting the financial advisory space after it launched a new portal for financial advisers mid-way through this summer, which allowed intermediaries to act on behalf of lending clients.

Advisers can earn money through one of two ways by using the portal: either by taking some of the interest clients earn through the platform, which is capped at 1 per cent across products, or by putting a pre-arranged fee on using the Ratesetter through them.

ashley.wassall@ft.com