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:
The Jersey Financial Services Commission has launched a campaign this year to raise awareness in respect of the mis-selling of financial products. Of particular concern are cases when individuals with limited resources and little or no knowledge of complex investments have been advised to invest in high-risk products that are suitable for sophisticated and experienced investors only.
Here are some key points to remember when taking advise about a financial investment:
- You may have a good relationship with your investment adviser but remember, ultimately this is a business transaction. In a small community, the lines between business and friendship can easily blur. Are you too close to the person advising you?
- Assess the advice on the merits. Do you properly and fully understand what the risks are: Can you clearly explain those risks to a family member or friend in just a few short sentences?
- Most members of the public are retail customers and not sophisticated investors – is the product been put forward for your consideration intended for the retail market or is it only suitable for sophisticated and experienced investors? If you don’t know the answer to this question, ask.
- If you are invited to sign documents, make sure you have read and understood the contents of those documents. If you need more time, you are entitled to take it. Has your investment adviser set out in writing the key risk factors relating to your product? Do you agree with the risk profile that has been ascribed to you by your adviser? If you disagree, say so.
- If you are advised to cash in early a relatively low risk investment or a pension, be extremely careful before agreeing to do so. This is particularly so if you are at or near retirement age.
- Take a step back and ask: does it sound too good to be true?
The Financial Services Ombudsman is able to adjudicate on complaints arising from the mis-selling of financial products and the obvious advantage of this system is that the investor does not incur costs by engaging the Ombudsman. However, the Ombudsman cannot consider complaints arising from events prior to 1st January 2010 and can only award a maximum of £150,000 in compensation. For those investors who have suffered losses in excess of this sum, or who acquired a financial product prior to 2010, the appropriate step is to bring a claim in the Royal Court.
Do you feel under pressure and tempted to spend money that you cannot afford at Christmas? To help you stay within your budget, the Consumer Council has put together a food and present planner.
If you use this or any planner, you are less likely to exceed your budget, and your money should go further.
Can’t print it? We can pop a copy in the post to you. Please call on 611161 or email us at firstname.lastname@example.org
Yuletide Puddings & PriceWatch
we taste tested 4 budget and 4 slightly more luxurious Christmas Puddings from our local supermarkets – Now it is your turn to see if you agree with our testers!
Heading out for a festive meal? Can a Service Charge be added to your drinks bill? Equip yourself with the knowledge to fully understand service charges.
We have joined forces with Trading Standards to list out Ten Tips to help survive Christmas
The Channel Island Financial Ombudsman has been in operation for a year now and the latest results show just what you have been complaining about and whether they can help or not.
Fancy joining us for one of our #free lunchtime seminars? The next topics include Financial Mis-Selling, Long Term Care, Curatorships, Consumer Protection, SCAMS and more….
Settle down with a warm drink and peruse our Christmas survival tips…ranging from call out charges to buying on line and the risks of fake products.
- Buying Online
In most cases if you shop online with a Jersey, UK or EU trader you have a right to cancel and receive a full refund, even if you just don’t like the goods or have simply changed your mind.
This is in addition to your normal statutory rights. There are some exceptions and time limits apply. Check it out before you buy. Extra tips here… http://www.jerseyconsumercouncil.org.je/consumer-skills/shopping-online/
- Product Safety
Be safe this Christmas. Follow the instructions and appropriate warnings. Make sure toys are CE marked and follow the intended age warnings.
- Know who you are buying from
If you are shopping online make sure you know who and where the trader is based. For example don’t assume you are buying from Amazon when you may be buying from an Amazon seller outside the EU.
Your goods may not comply with European safety standards, they may take a long time to arrive and the cost of returning them may be uneconomical.
Don’t be tempted to buy really cheap branded goods online. Electrical goods may be a fire or electrical shock hazard and perfumes and cosmetics may contain harmful substances.
- Additional Protection
You get additional protection when you buy goods or services over £100 if you paid using your credit card. If something goes wrong and the trader won’t help, the credit card company may have to step in.
- Christmas Loans
If you have to borrow money, make sure they are a reputable lender. Do you understand exactly what you are signing up to and what will happen if your financial situation gets worse? Is the lender a subscriber to the Jersey Code of Consumer Lending? See www.gov.je/tradingstandards/consumerlending
- Call out Charges
If you have to call out a tradesman for an emergency repair during this festive season make sure you know what the ‘call out’ or ‘minimum charge’ will be before you agree. Make sure you both understand what work will be carried out, what it will cost (or how it will be calculated) and when and how the trader expects payment.
- Faulty Goods
You have statutory rights if goods are faulty or not fit for purpose. Try to keep gift receipts as it will help if things go wrong and don’t delay in complaining.
- Unwanted Gifts
Your statutory rights do not apply if you simply changed your mind. Check out the store’s returns policy before you buy. Remember if you bought online, you may have additional rights.
- Recall and Safety Notices
Trading Standards publish product recalls and safety warnings. To sign up for notifications, visit www.mygov.je
You can select the category of goods you are interested in, for example food, toys, electrical goods and nursery products.
Finally, do you know where to get help? Trading Standards offer a free and confidential Consumer Advice Service. The drop in service is located under the clock in the Central Market. You don’t need an appointment. Alternatively you can call on 448160 or email email@example.com
Are you paying unnecessary IPT?
Insurance Premium Tax (IPT) is a UK tax applied to general insurance premiums. There are two rates. Standard at 9.5% and a higher rate of 20% for travel insurance, mechanical / electrical appliances insurance and some vehicle insurance.
Premiums for risks located outside the UK are usually exempt. Therefore if you are taking out an insurance policy with a UK supplier, ask about exempting IPT before you enter into the contract or renewal. Some suppliers may ask you to fill out an IPT exemption declaration form confirming your residential status as being permanently outside of the UK for the period of insurance. It is likely that you will have to return this before the supplier deducts the IPT. Ask what the arrangements are before you sign up or renew. In most cases they will not refund retrospective overpayments.
3 Recent Case Studies Mick and Pam have private medical insurance. They are automatically charge IPT even though the supplier knows they are non-UK residents. In the past, they used to send Mick an IPT exemption form to fill out with their annual renewal. When it was returned they would send out a revised renewal with the IPT removed. They have stopped this practice and it is now down to Mick to request and send in this form on renewal and he will not receive a reminder. Remembering to follow these steps on renewal has reduced their premiums by £60 per month, although the provider will not entertain a retrospective refund for the couple of years Mick did not realise he was being charged IPT.
Vicky and her friends required travel insurance for a European holiday. As they booked through one particular operator, they opted for their travel insurance which was available online (through a third party provider). After obtaining a quotation, Vicky resisted the temptation to pay there and then. Instead, she called the provider giving her quotation reference and asked for the IPT to be deducted. After a little convincing and reference to their own website to prove the policy extends to Jersey, the provider was happy to take payment over the phone for the insurance cover less the IPT and the insurance policy was then emailed to Vicky.
Finally, Rob had experienced a few problems with hire cars. On one occasion he refuelled his hire car with the wrong type of fuel which turned out to be a costly mistake! He was also concerned that he would have a high insurance excess but felt the additional insurance available on the hire car desk seemed to him to be excessive (often referred to as Excess Waiver Insurance, Super CDW). As he was likely to hire other vehicles in the coming year he decided to look into an annual car hire excess insurance policy. He found one online that included £6,000 towards the hire car excess, £1000 towards misfuelling and other key benefits. Whilst ‘checking out’ he couldn’t see how IPT could be deducted. He sent the provider an email enquiry and they came back to him advising that if he took out the policy and sent them the policy number and the last 4 digits of the payment card used to pay for the policy, they would be happy to refund the IPT within 5 working days. Rob is now driving his hire car safe in the knowledge that he has comprehensive annual European car hire excess cover but also paid a reasonable price less the IPT!
Check out your insurance policies and let us know if you are paying unnecessary UK IPT. How much can you save?
4G Data Usage…How MUCH?
Peter Zunino, Head of Marketing, Airtel-Vodafone.
The introduction of 4G data services has totally changed the way mobile data is being consumed, as well as the amount of data. For example, one of our sites now takes more data traffic than the whole of our network did before the launch of 4G!
The quicker 4G experience means you can do much more online in the same amount of time. This uses more data, and can lead to unexpected charges if users are not aware of this. We have done a lot of work to help educate customers around data usage and here are some of the key things smartphone users should be aware of.
- Consider the activities and Apps that use lots of data, ie video streaming and downloading – think about doing them over a Wifi connection. Netflix for example can use 1GB of data per hour
- Most smartphones have built-in systems which track your data for you. These are not 100% accurate but will give you a fair idea of how much data you use
- Apps are constantly adding functionality. Facebook for example will auto play data hungry videos if this setting is not turned off
- Be wary of using your mobile device as a hot spot so your friends can connect to it, and watch videos for example – this uses a huge amount of data
- Contact your provider and ask them to review your plan – you may not have a high enough data allowance for the newer, faster 4G experience. You can bolt on extra data if need be
For a comprehensive guide to managing data, including step by step instructions on different smartphone operating systems, please visit our site
Telco Contracts – when does ‘Fixed Mean Fixed’?
When you sign up for a mobile phone, telephone or broadband contract you know you’re going to be committing to a fixed length contract, usually 12, 18 or 24 months.
You also know that the terms of that contract – including how much you pay for it – should be fixed over that period. The consumer is tied into that contract unless they pay an early termination charge (“ETC”) to leave before the end of the minimum contract period.
Remember that the Telco providers’ terms and conditions usually allow for price increases and variations to your contract during this term.
Thanks to a licensing condition called ‘fixed-means-fixed’ imposed by the regulator in April 2014, if your provider decides to increase prices part way through your fixed term contract, you should be given two calendar months’ written notice before the price rise and an option to end the contract penalty free. For example, if the amount of data included in your contract is reduced, you may end up paying more than originally agreed. As a result of change to licence conditions, you can exit the contract without penalty if the provider increases the cost of their deal.
This right only relates to changes to products within the list of services paid for by the recurring fee / subscription charge. If your deal includes a number of free services, the key point will be whether those were included in the original offer. If they were not, even if they were free originally, the operator is able to introduce a charge for them in future. It also does not apply other ‘out of bundle’ prices such roaming charges.
Please be aware that the protection afforded to you under ‘fixed-means-fixed’ only covers price increases ‘in-bundle’. In other words, your monthly allowances.
‘Out of bundle’ costs, being the amount you pay for exceeding your monthly allowances or new charges introduced for something which was originally free are likely to not be caught by this protection.
Our advice is to make sure you fully understand what is ‘in’ or ‘out of bundle’ when you sign up to a new contract and be aware that prices can change.
Flying off on Holiday
Check out our Plane Facts guide which highlights your rights if things go wrong
It is important to be aware of your rights:
If your flight is delayed or cancelled you are entitled to assistance and in some cases compensation. If you are denied boarding because the airline has overbooked the flight, you are entitled to compensation.
Your rights are protected by European Law (Regulation (EC) 261/2004) and are the same regardless of the airline you are travelling with.
Your rights are protected for any flight from within the European Union (EU) and on flights from a non-EU country into the EU, provided the airline is licensed in the EU.Read More