Peer-to-peer lending, also known as Private Lending, involves matching up investors, who are willing to lend, with borrowers – either private individuals or small businesses. We are sharing this article with you to raise awareness that peer to peer lending is a private arrangement and comes bearing significant risks; attractive as a solution but be cautious and understand exactly what you are signing up to.
By cutting out the middleman and not having the overheads of traditional banks, peer-to-peer lending may offer more favourable rates, or help borrowers who have struggled to get a personal loan elsewhere.
What are the risks as an investor?
By being connected directly to someone who wants to borrow, the most immediate risk to your money is if a borrower fails to repay what you’ve lent them (known as ‘defaulting’).
Your money is also not protected by the Depositors Compensation Scheme which guarantees your savings with Jersey banks up to the value of £50,000.
What are the risks as a borrower?
- Loans are usually granted on an interest-only basis (meaning you repay no capital) and for a short duration, typically 1 to 3 years.
- You would normally still need to have a deposit, or a stake in whatever property you’re putting up as the asset (sometimes called the security).
- At the end of the term, the loan is either paid off by some means, such as replacing with a conventional bank mortgage or selling the property, or in some cases the loan can be renewed for a further period. Take care, if you have struggled to obtain a traditional mortgage and your financial situation has not improved you have no guarantee of obtaining a traditional mortgage at the end of the term to enable you to continue to live in the property. What will you do if the value of the property goes down?
- Interest rates can vary, depending on the lender and their appetite or consideration of the risks involved.
- While the rate of return may be favourable to the investor/lender, the interest rate for the borrower can be higher than high street lending and much higher arrangement and early redemption penalties.
- Borrowers may intend for the loan to be a short term, interim solution before moving to mainstream mortgage lending but if they are still in the same circumstances at the end, the loan can be rolled over (and over) which just continues the difficulty.
- We strongly recommend that you ask any lender about the Jersey Code of Consumer Lending; this is a voluntary or ‘self-regulatory’ code, which sets standards of good lending practice. These standards seek to ensure that Jersey consumers are treated fairly and that the opportunities for taking on excessive financial commitments are reduced. The Consumer Council is working hard with industry, Jersey Financial Services Commission, Citizens Advice, Trading Standards and the Financial Services Unit, Chief Minister’s Department to update the Code and to raise awareness of its importance as it provides various safeguards for consumers. The Financial Ombudsman will take codes of practice into account when determining a complaint. The Code exists even whilst it is being updated, it can be found at this link gov.je/tradingstandards/consumerlending and remains fully relevant.
- The Channel Islands Financial Ombudsman (CIFO) is an independent organisation that resolves complaints about financial services with powers to investigate complaints and award compensation. If you take a loan from an individual, rather than a lending business, you may not be able to complain about them to CIFO. Contact details ci-fo.org and 01534-748610.
What advice do we have for consumers?
Ask yourself why it is important for you to take on additional risk with peer-to-peer lending?
Will your financial situation improve with hard work over time so you can access the traditional mortgage market?
Do you have other housing options? Possibly rental
Our advice is to get professional, qualified and independent legal and financial advice before making any decisions. Don’t let the excitement of a new home cloud your judgement on such a large long term financial commitment. This may be the largest financial decision you ever make – don’t let it be the worst!
Make sure you have a professional valuation on the property you are thinking of buying. Consider if your property will be adequately insured – life insurance, critical illness, building and contents?
Terry Vaughan, Director, Head of Risk and Compliance at The Mortgage Shop and Henley Financial highlighted that “If you’re a borrower, your lawyers need to make sure the person granting the loan has the authority and legal right to do so. Your professional adviser will also check on source of funds for the loan being proposed. You also need to ensure the terms are suitable for you. You need to be aware of the repayment schedule and be sure that it is within your budget”
Eating on a budget, finding time and having the confidence to prepare meals from scratch, are why sometimes many find it difficult. With a bit of planning, using leftovers and just giving it a go, it does get easier.
A good place to start is a weekly menu plan and a budget, which will help you get into the habit of knowing what your weekly shop will cost. Allocate one or two days for a pasta dish, they are cheap, quick with many variations, such as meatballs and spaghetti, ham and pea or simply fresh tomato sauce, all of which should cost under £5.
Sunday is a great day for a roast as you will have more time, plus you can use the leftovers for a dish or two during the week. Why not buy a bigger chicken and strip the carcass down to create a chicken and leek pie on Monday, or a chicken curry with some simple flat- breads another day?
Once you become confident with creating really simple dishes, you’ll find yourself building several weekly meal planners which you can just use time and time again. Because after all, we need these things to be simple.
Caring Cooks have a range of cost effective recipes allowing you to try your planning, shopping and cooking skills. Caring Cooks are treating us all to a Cookery demonstration 27th September Coop Grande Marche St. Helier 12:30 – 13:30 pm.
Let’s get started…
- Work out your weekly grocery budget (planners available by post or http://www.jerseyconsumercouncil.org.je/money-matters/budget-planner/).
- Plan out a weekly menu (recipes available by post or http://www.caringcooksofjersey.com).
- Write out your shopping list; including weight of ingredients.
- Be disciplined when you shop and stick to your budget. Where possible ‘Shop the Offers’. Get familiar with your supermarket’s offer cycles.
- Allow planning and preparation to be a priority. This gives you time to batch-cook and freeze where appropriate. There is no need to feel guilty about time spent planning and cooking.
- Enjoy your cooking, keep budgeting and planning.
If you would like to learn new skills and confidence in the kitchen, and are over 16, please get in touch with Caring Cooks to find out more.
Recipes which share ingredients and are simple to make can be found here on Caring Cooks website:
Your financial circumstances might sometimes mean that you require professional advice to make sure that you make the correct decisions and take the correct actions.
A professional adviser will help you to prioritise your financial goals and give you an understanding of the bigger picture, taking into account other important factors such as any potential tax implications and investment risk. There are thousands of different financial products and investments available and choosing the right one for you can be difficult and at times confusing.
Do you need financial advice?
You may find it helpful to speak to a financial adviser if you are not sure what you need to do or are feeling confused about the options available to you. Financial advisers can help you with a variety of things, such as:
- Providing an income after you stop work
- Saving and investing your money
- Buying and insuring your home
- Insuring yourself and your family against illness, disability or premature death
- Passing your assets on to the next generation tax efficiently
- Changing personal circumstances such as starting a family, redundancy, divorce or bereavement
Once your financial adviser has recommended a plan to help you achieve your financial goals it should generally be reviewed on a regular basis to ensure it remains appropriate to your circumstances and accommodates any changes to your priorities.
What does professional financial advice cost?
Financial advisers usually charge for their services in one of (or a combination of) the following methods:
- an hourly rate – typically averaging around £150 – £250, but can be higher for specialist advice;
- a percentage of the money invested – this can vary depending on the size of the initial investment and will typically be 0.5% to 3%. An annual charge for reviewing an investment portfolio is likely to be 0.50%-1%;
- a fixed project fee – typically £1,000 – £5,000 for a specific piece of research and advice work;
- some firms may also charge clients a monthly retainer fee of between £50-£100.
Fees vary depending on the experience and qualifications of the adviser and the geographical location of the business.
Advisers are no longer paid commission, except for certain non-investment product recommendations, and they have to explain to you how much the advice will cost you. You will need to agree this and how you will pay for it before any advice is provided.
What should I be looking for when dealing with an adviser?
It is important to understand whether your adviser is regulated to provide investment and financial advice in Jersey. A regulated advisory business needs to have in place professional indemnity insurance, which would provide their clients with an additional level of security.
A professional regulated adviser will be able to draw your attention to the potential pitfalls of what may seem a fool proof way to get a much better return on your assets. This is becoming more common place because traditional methods of generating returns on your capital such as bank deposits and low risk investments are currently providing little or low returns than in previous times.
The following list is a prompt for some of the questions you can ask your financial adviser.
- Are you regulated to provide financial advice?
- What is you experience?
- What types of clients do you work with?
- What are your qualifications?
- Do you offer an area of expertise?
- How much will the advice cost?
- What information will you need from me?
- What are the risks associated with the recommendation?
Financial planning involves revealing detailed personal financial information and can involve divulging information about your goals and ambitions, so you need to be comfortable in the company of an adviser. It is worth meeting a few to determine who you are most comfortable working with in an ongoing professional relationship.
There are two great truths when considering investments
- If it looks too good to be true it generally is
- Don’t put your investment eggs in one basket
Most people have two or three main protection needs that can be covered by Life Insurance (often known as Life Assurance):
- Paying off large debts such as your mortgage in the event of your death.
- Family protection, where you leave behind money for your family to live on after you’ve died.
- Funeral expenses
Different types of insurance policies are good for different protection needs:
The most basic type of life insurance is called term insurance, where you choose the amount you want to be insured for and the period for which you want cover. If you die within the chosen period, the policy pays out. If you don’t die during the term, the policy doesn’t pay out and the premiums you have paid are not returned to you.
There are three main types of term insurances to consider: level term, decreasing term and family income benefit. Sometimes a combination is the best answer.
- Level Term Life Insurance
A level term policy pays out a lump sum if you die within the specified term. The amount you’re covered for remains level throughout the term – hence the name. The monthly or annual premiums you pay usually stay the same, as well.
Level term policies can be a good option for family protection, where you want to leave a lump sum that your family can invest to live on after you’ve gone. It can also be a good option if you need a specified amount of cover for a certain length of time, e.g. to cover an interest-only mortgage.
You might also consider including an automatic annual increase of the sum assured to counteract the effects of inflation or increasing expenses. There are even budget versions where the monthly cost is lower during the first few years.
- Decreasing Term Life Insurance
With a decreasing term policy, the amount you’re covered for decreases over the term of the policy. These policies are often used to cover a debt that reduces over time, such as a repayment mortgage.
Premiums are usually significantly cheaper than for level-term cover as the amount insured reduces as time goes on.
- Family Income Benefit Life Insurance
Family income benefit life insurance is a type of decreasing term policy. Instead of a lump sum, though, it pays out a regular income until the policy’s expiry date if you die.
The upside of family income benefit is that it is easier to work out how much you need. For example, if you take home £2,000 a month, you can arrange for the same amount to be paid out to your family if you die.
As the name suggests, whole-of-life policies are ongoing policies that pay out when you die, whenever that is. Because it’s guaranteed that you’ll die at some point (and therefore that the policy will have to pay out), these policies are more expensive than term assurance policies, which only pay out if you die within a certain timeframe. These are often used when cover is required for funeral expenses.
The good news is that Life Cover in general is now more affordable, and most importantly can provide you with peace of mind, knowing that your family will be financially protected in the event of your passing away.
For and on behalf of Cherry Godfrey Insurance Services (Jersey) Ltd
Regulated by The Jersey Financial Services Commission in the carrying on of investment and general insurance mediation business
A little-known flaw in the Consumer Credit Act may put Jersey shoppers at risk of losing their money if things go wrong.
Under Section 75 of the UK Consumer Credit Act, shoppers who make payments between £100 and £30,000 on a credit card can get their money back if the goods turn out to be faulty, not as described or don’t arrive. The UK law makes the retailer and credit card company jointly liable. Jersey consumers usually benefit from this protection due to terms and conditions reflecting the UK Consumer Credit Act.
However, a little-known loophole revealed by a MoneySavingExpert means that consumers will only be reimbursed if there is a direct link between the customer, their credit card provider and the supplier. If the payment is processed by a third-party company then the protection under Section 75 does not apply.
So, if you bought a concert ticket through an agent on a credit card, you may not be able to get your money back using Section 75 if it doesn’t arrive.
The same may apply if you booked a holiday through a travel agent. However, the travel industry may very well have their own financial protection schemes in place.
You may also not be covered for credit card transactions made through online payment platforms, such as PayPal, because it breaks the chain between customer and supplier. However, if the firm you’re buying from has a “Commercial Entity Agreement” you’ll be able to make a claim under Section 75 even if you use PayPal. PayPal has its own Buyer Protection scheme. This covers online purchases made on eBay and other websites if the item does not arrive or match the seller’s description. Property, vehicles, custom-made items and industrial machinery are among some items that are not guaranteed.
Amazon is another firm where Section 75 may not apply. Shoppers who buy items on a credit card from third-party suppliers on the online marketplace will not be covered. If you buy directly from Amazon then you could make a claim.
Confused, it is not surprising! Trading Standards offers the following advice:
- Know who you are buying from and who will take your payment
- Wherever possible put payments on your credit card
- If you are entitled to protection, you are still covered even if a small proportion, part payment or deposit was paid using your card
- When things go wrong, don’t delay. If you don’t have Section 75 protection you may alternative protection through platform buyer protection schemes, but these are often time limited.
Free confidential consumer advice is available from Trading Standards on 448162 or email email@example.com. You can also drop in, they are in the Central Market under the clock.
When we pay a deposit, we are committing to a binding contract with the outstanding payment to be paid at a later date. The natural position of the Law is that the deposit will not be refunded should you decide you do not want the goods or services. You should be aware that the trader may be in a position to pursue you for the outstanding money.
For example, when ordering a wedding dress or prom dress, we are usually required to pay something upfront. It is always recommended that you ask whether the amount it is refundable or not, and if it is, ask the person to indicate the term on the receipt or by email.
For further advice on this matter or any other consumer issues, please contact Trading Standards on 01534 44160.
The Summer Holidays are fast approaching …
The effectiveness of water – resistant product SPF 30 could drop to SPF 15 after a swim. Plus towel drying is also likely to rub off sunscreen.
This is an indication of how long sunscreen protects against ultraviolet radiation that’s linked to skin cancer and is the main cause of sunburn (UVB)
The SPF number doesn’t relate to the amount of protection a product provides it relates to time from when YOU step into the sunshine, depending on your own skin type – if an SPF30 product is applied correctly it will protect you for 30 times longer than if you wore no sunscreen. The clock doesn’t get reset each time you reapply the time is set for the day and if you don’t apply enough it will not provide its full SPF.
Cancer Research UK says it’s all about ‘How well you put it on’ for example
Most people under-apply sunscreens, using ¼ to ½ the amount required. Using half the required amount of sunscreen only provides the square root of the SPF. So, a half application of an SPF 30 sunscreen only provides an effective SPF of 5.5!
When a ship/aircraft arrives in Jersey from a place outside the Common Travel Area (CTA), it is a requirement that the passports of all passengers are checked.
When a ship/aircraft arrives in Jersey from a place outside the Common Travel Area (CTA), it is a requirement that the passports of all passengers are checked. Such checks include the swiping of every passport. There can be no exceptions for the holders of passports issued in Jersey. To apply such an exception would place in jeopardy the Island’s position in the CTA, and potentially lead to the UK introducing a passport control between Jersey and the UK.
The requirement to swipe all passports is a relatively new one, but has become necessary as a result of heightened security. It takes approximately 10 seconds to swipe a passport, and this obviously increases the time it takes to pass through the immigration control. It is the view of the Customs and Immigration Service, however, that this is acceptable if this means keeping the Island safe and ensures that the Island’s immigration control is not seen as a weak link in the CTA.
 The Common Travel Area is an open borders area comprising Ireland, the United Kingdom of Great Britain and Northern Ireland, the Isle of Man, and the Channel Islands. British Overseas Territories are not included.
Incorrect charger use exposes weaknesses in the battery and is likely to cause damage.
By using a charger that is too powerful for the device you are charging, it can expose weaknesses in the battery and cause it damage, leading to a shortened life span of the item or in more extreme cases, the battery could fail and pose a fire hazard. For example, e-cigarette batteries generally run on lower amperage to mobile phone chargers. Nationally there has been a rise in fires involving e-cigarettes; the direct cause being due to failure of battery packs during charging.
A spokesperson from Electrical Safety First has commented ‘Always use the charger that is supplied, or designed to be used, with the device. If a charger with a different amperage is used, this could lead to an incorrect charge being supplied resulting in damage to the battery. A damaged battery is at risk of catching fire or exploding. Lithium batteries, which are common in products like e-cigarettes and mobile devices, are very sensitive and need to be charged carefully.’
When charging devices:
- always use the correct charger and follow the manufacturer’s instructions. Mobile phone chargers are generally too powerful for charging e-cigarettes
- never charge a battery that has signs of damage, that has been dropped, or has been subjected to impact
- never plug a charger into a non-approved mains power transformer
- check that your e-cigarette battery has overcharge or overheat protection
- remove the battery from charge when complete, don’t overcharge
- never leave a battery on charge unattended
- don’t use if wet or exposed to water
- E-cigarettes -do not over tighten the atomiser or when connecting to the charger
- ensure that you dispose of batteries correctly
If you require any further assistance please contact Trading Standards on 01534 448160.
With thanks from Trading Standards & Jersey Fire Service
Customs Explain that the De Minimis Waiver is intended to benefit an individual making a single purchase worth under £240 and shipping it to Jersey
All goods are liable to GST on import regardless of value. The de-Minimis waiver under which GST is not charged is not a right but an administrative concession designed to manage the overwhelming numbers of consignments and letter packets that would otherwise have to be charged up. The cost of handling such high volumes of low value goods outweighs the amount that would actually be collected. The de-minimis waiver ministerial decision can be found by clicking https://www.gov.je/government/planningperformance/pages/ministerialdecisions.aspx?docid=0995E584-AA0F-4CA0-96A9-A5BDF532FB64
The de-Minimis waiver was intended to benefit an individual making a single purchase worth under £240 and shipping it to Jersey. It was not intended to allow individuals, or indeed businesses, to make several purchases all under £240 from the same supplier on the same day hoping they will arrive separately. The Customs & Immigration Service web page on gov.je https://www.gov.je/TaxesMoney/GST/GSTCustomers/Pages/DeclaringPaying.aspx#anchor-1 clearly states that “If you order multiple items (consignments) that arrive as one shipment, we will treat this as a single delivery.”