Back in June, secured business lender ThinCats became the first peer-to-peer platform to allow investments through a Self Invested Personal Pension (SIPP).
Fantastic news for anyone allocating new funds to the platform – but what of the multimillions already tied up in ThinCats loans? Transferring existing loans into a personal pension fund has proved tricky. The Pension Fund Manager used by ThinCats harbored justifiable concerns over the valuation of the assets that investors were looking to transfer. But the demand for inclusion within the tax-efficient SIPP wrapper has been such that the ThinCats team has now devised a method of valuing current accounts – in order that they might be transferred into a personal pension fund.
The ThinCats team themselves will be responsible for the valuation – and will commit to favouring neither buyer nor seller in the process. Given that all assets remain on the platform whether transferred or not, ThinCats should have no cause for favouritism anyway. The platform intends to align its valuation methodology with the standards recently set by the P2PFA for reporting default statistics. But not all SIPP/SSAS managers will accept this arrangement – it will be down to the investor to double check before attempting a transfer.
ThinCats released this statement regarding its valuation methods:
“Our valuation will be based on our assessment of the value of the loans assuming a willing buyer and a willing seller and using the ThinCats secondary market. Whilst we will be taking into account the market track record for liquidity our assessment will not provide any guarantee that such a price would actually result from selling the loan on the market because that will depend upon market conditions at the time of the sale.”
The practicalities of the valuation are as follows. Upon request, a pair of ThinCats representatives and at least one other (with a banking or legal qualification) will form a valuation committee. These individuals will collectively settle upon a fair valuation of the account in question. The cost of the service is £500 plus VAT, and as such is probably only going to be of interest to those with a ThinCats account worth at least a 5 figure sum. It’s not possible to transfer part of a loan portfolio – only the ownership of an entire ThinCats account.
The allowance of SIPP investments via the ThinCats platform was a tremendous innovation that flew somewhat under the radar in terms of media buzz – particularly when compared with frenzied reactions to the prospect of peer-to-peer ISAs. According to the site, roughly 5% of lending on the platform is made through a personal pension at present. ThinCats’ efforts to allow account transferral suggests that the demand is there for that 5% to skyrocket in the coming months.
21 March 2023
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21 March 2023
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24 March 2023