A note from Jon Segal at Fox Williams:

“We are very pleased to be working with the Alternative Funding Network in the year ahead, following the work we did together last year. is a key location for ambitious tech businesses and the AFN has an important role to play in providing industry intelligence to the Alternative Finance Sector. At Fox Williams, our dedicated FinTech and Alternative Finance team delivers legal, yet practical, advice to businesses in this exciting space, ranging from start-ups to established players. Regulation, data protection, contractual arrangements and investments are just some of the areas on which we advise.”

 

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There are some interesting new updates in the FinTech and Alternative Finance space that will be sure to have a positive impact on the sector.

 

Tax relief for P2P lenders

 

The first version of the Finance Bill 2016 was published in late March to implement the tax changes announced in the 2016 Budget, 2015 Autumn Statement and previous budgets.  The Bill has just passed its second reading in the House with the hope that the Bill itself will come into force either later this year or early 2017.  One particular highlight will be of interest to peer-to-peer lending platforms.

 

The Finance Bill 2016 will introduce a new tax relief that will allow lenders subject to income tax on interest that they receive from peer to peer (P2P) loans to set losses from irrecoverable loans against other P2P interest that they receive.  In this instance “irrecoverable” means irrecoverable other than by legal proceedings or by the exercise of any right granted by way of security for the loan – i.e. positive enforcement steps are being taken.

 

This tax relief will allow lenders to claim relief on P2P loans that become irrecoverable from 6 April 2015, and will apply automatically to set losses from P2P loans that become irrecoverable on or after 6 April 2016 against other P2P interest received through the same platform.  Stating the obvious,  this means that lenders cannot offset interest earned on one P2P platform against losses incurred on another platform.

 

We will clarify the Government’s position and send further updates once available but for the moment this is welcome news for those running P2P platforms and shows further willing by the Government to promote AltFi opportunities and encourage individuals’ use and continued investment into P2P platforms.

 

 

UK Government’s assurance that UK will continue to be the global capital of FinTech

 

Treasury Minister Harriett Baldwin MP gave an upbeat about the Government’s commitment to FinTech at Innovate Finance’s Global Summit.

 

Baldwin reiterated that “the UK Fin Tech sector generated £6.6 billion revenue in 2015. With a workforce of over 60,000 employees, more people work in UK FinTech than in Singapore, Hong Kong and Australia combined.”

 

 

Baldwin told the conference that the Government will:

Fin Tech Panel - establish a FinTech panel and deliver support functions which will set an overarching FinTech strategy for the UK and monitor and drive forward FinTech initiatives;

 

Open Banking Standard - start an initiative to implement an ‘open banking standard’. This will allow Fin Techs to use bank data to provide a range of value-added services to consumers, and should change the way customers can access and use financial services.

 

Fin Tech Hubs – oversee continued growth of regional FinTech hubs around the UK and create a professional services ‘information hub’ for FinTech startups, making it easier for them to source legal and accountancy services, and access practical and cost-effective basic services.

 

Fin Tech Bridges – Baldwin appeared in her speech to be particularly pleased to have coined this new ‘phrase’.  The idea is that HM Treasury will work alongside UK Trade and Investment to establish ‘Fin Tech Bridges’ with priority global markets. These bridges will help UK Fin Tech firms expand internationally, as well as attracting international FinTech companies and investors to the UK. 

Baldwin concluded by saying, “this is just the start of our beautiful friendship – and that we will be announcing other ways we can help you help UK consumers.”

A beautiful friendship indeed, such words will bring further optimism to UK FinTechs on continued Government support in the future.

Baldwin was followed on to the podium by the FCA's director of strategy and competition, Christopher Woolard, who unveiled plans to take the wraps off the watchdog’s regulatory sandbox initiative on 9 May 2016.

The sandbox may allow new entrants to get to market quicker than it has taken the incumbents, but on the flip side it may allow incumbents to safely try out new products on select participants before launching them into the wider market.  Please look out for further updates on this from us.

So all in all a positive few weeks for UK Fin Tech. 

 

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Jonathan Segal, Partner at Fox Williams LLP

 

Jonathan is a partner in the FinTech and Alternative Finance team at Fox Williams, a City-based Law Firm. He advises clients across the FinTech and Alternative Finance spectrum, from start-ups disrupting existing markets with innovative technology to financial institutions looking to invest in new technology.

 

He has particular expertise in peer-to-peer and crowdfunding platforms, drawing on his extensive experience in the banking and finance sector gained both in-house at major financial institutions and in private practice. His experience spans a variety of financial products, including loans (both corporate and consumer), real estate and development finance, asset-based lending, receivables financing, asset finance, trade finance, capital markets, derivatives and repos. A regular speaker at industry events both at home and abroad, Jonathan is also heavily involved in next generation disruptive financial products such as virtual currencies (including Bitcoin), blockchain technology and the use of Big Data in financial predictive analytics and disruptive insurance models.

 

Fox Williams LLP are experts at advising entrepreneurs and FinTech businesses. For more information as to how Fox Williams can help you (including arranging a free consultation) or for further information on the issues discussed in this article, please liaise with either  or .