Peer-to-peer lending platform Ratesetter expects to launch into the retirement space with two self-invested pension providers in two weeks time, just in time for April’s at-retirement reforms.
At the start of the year, FTAdviser revealed that the firm was “very, very close” to a deal with two providers, with two more likely to follow before the end of the second quarter.
Ironing out issues to prevent lending to ‘connected parties’ such as family members and segregating bank accounts has meant all four deals will not now be done by the end of March, but Ratesetter said at least two will be in place before 6 April.
Ceri Williams, business development manager, told FTAdviser that while non-disclosure agreements meant he could not say who the firms were, they are “well known” businesses. He did say one is a wealth manager with a Sipp trustee business attached.
Some have suggested alternative income products such as peer-to-peer could prove popular with savers once new flexibilities are introduced from April. A key concern was ensuring that money invested could remain in a pension environment.
Mr Williams said that the problem with connected parties, lending to business partners, close relatives or anyone who can inherit from the investment holder’s will, is that it is illegal to lend to them.
This was overcome by asking investors to provide a list of these people self certifying those they cannot lend to, who will then be removed from their borrower lists without compromising the anonymous basis of the platform.
As for the segregation of bank accounts, Mr Williams said an extra layer of technology has now been developed to allow for transactions to be carried out only between Ratesetter and the Sipp trustee.
P2P lending through Sipps was restricted by rules which required providers to hold higher levels of capital for non-traditional investments, leaving only small self-administered schemes.
However, the pension changes announced in last year’s Budget are forcing firms to offer a wider array of income options to clients who are no longer restricted in when or how they access their pension.
Mr Williams said that given this shift in responsibility for retirement, the product is likely to attract a lot of interest from people looking for a “low risk, low volatility, cash proxy”.
FTAdviser sister newspaper the Financial Times reported last June that the first ever P2P Sipp partnership had been signed between lending platform ThinCats and financial portal SippClub, with Ratesetter’s founder and chief executive Rhydian Lewis at the time citing “huge demand”.