Compare P2P lending accounts and IFISAs now

How To Easily Qualify As A Self-Certified Sophisticated Investor To Lend Freely Through Any P2P Lending Website

Click "Learn" to get help

This page was last updated on 12 February, 2020

It's a hot time in IFISA season with several peer-to-peer lending companies offering highly attractive cashback of up to £4,000 or 5% (even up to 200% if you're just lending small amounts!) Read more.

Most peer-to-peer lending websites and IFISA providers allow anyone to lend. If you're a beginner, they want you to commit not to lend more than 10% of your savings and investment pot across all your P2P loans.

If you want to lend more than that, get yourself upgraded to the status of self-certified sophisticated investor.

It's not especially hard to do this and most 4thWay users will already be eligible to do so.

Most of the time, it involves getting some extremely basic experience in P2P lending. But sometimes it involves getting experience in another form of investment.

To lend freely through all P2P lending and IFISA providers

If you want to be free to choose the amount you lend through all peer-to-peer lending and IFISA providers, here's the simplest – and cheapest – way to do it:

Yes, if you know what Seedrs is, you might find this just a bit baffling and bizarre. Seedrs has nothing to do with P2P lending. It's an online equity crowdfunding platform through which you buy shares in startups. This type of investing is as risky as legitimate investing gets. Thus, it's far from the risks of P2P lending, which is typically (but not through all providers) lower risk than the stock market.

You open Assetz's ordinary lending account and not its IFISA – unless of course you want to lend properly through Assetz. This is because you're only allowed to have one IFISA per tax year that holds new contributions from you. So you don't want to waste your IFISA on £2 worth of lending.

Read the Assetz Capital Review and visit Assetz Capital*. (See how to pass the Assetz Capital Appropriateness test.)

See how to pass the Seedrs appropriateness test and visit Seedrs.

Seedrs is optional!

If you really don't want to open a Seedrs account or any other crowdfunding account, you can still open the Assetz Capital account and you'll be eligible for the sophisticated investor status at most peer-to-peer lending websites.

This is because it's only a minority of P2P lending websites require that you have have experience investing in shares that aren't listed on the stock market.

See the table in Who Can Invest In P2P Lending? In that table, if a peer-to-peer lending company has got a “Yes” in the “Self-certified sophisticated 1” column, you don't need any startup crowdfunding experience.

What if you actually want to lend properly through Assetz Capital?

If you already wanted to open Assetz Capital's IFISA by choice, or if you wanted to lend more than 10% through Assetz Capital, you should choose another P2P lending website first to gain your sophisticated status.

Because if you sign up to Assetz now – before you've earned your sophisticated investor status – you'll be required to keep your limit of 10% for 12 months before you're allowed to upgrade to sophisticated.

So, for those of you interested in lending properly through Assetz, you could instead try RateSetter*, which has just a £10 minimum and you get £20 cashback if you click through a 4thWay link to RateSetter.

The rules are still not spelled out with 100% clarity, but it's unlikely that opening two different RateSetter accounts is sufficient to pass the test. They all count as one account, because your money is effectively being spread across all the same loans in all RateSetter accounts.

So you will need at least one more P2P loan or one more P2P lending account on top.

To that end, Growth Street*, Loanpad* and Octopus Choice also have a £10 minimum. Again, these accounts spread your risk across all loans.

You could instead pick up two individual loans through Rebuildingsociety*, at £10 each, or LendingCrowd*, at £20 each. In this case, two loans at LendingCrowd, or two loans at Rebuildingsociety, is fine. You don't need one loan from each.

Before I go on with some more tips on qualifying as a sophisticated lender, here are a few useful links to get you started on any of those:

Visit RateSetter* and read the RateSetter Review.

Visit Growth Street* and read the Growth Street Review.

Visit Loanpad*, pass its appropriateness test and read the Loanpad Review.

Visit  Octopus Choice, pass its appropriateness test and read the Octopus Choice Review.

Visit Rebuildingsociety*.

Visit LendingCrowd*, pass its appropriateness test and read the LendingCrowd Review.

What if you've already been lending in one lending account?

The sophisticated investor rule is new. If you already have started lending through one lending account before being asked to confirm your investor status, that lending counts towards your total at the same P2P lending website.

This means, if you now open a second lending account, or lend in one loan somewhere else, you will already be eligible for sophisticated status when using your first P2P lending account. You can log into that the account and select your new status.

You need to do it in that order: start lending in a second P2P lending account and then log into your first account and choose your investor status. If you log into your existing account first, you'll be asked to select your status and you will probably be stuck with it for 12 months.

So open another account, lend a little, then log into your existing account. That way, you won't be restricted in that first account.

But note that you will usually be restricted in the second account you opened for 12 months, because you will be required to select your status there before you lend through it.

What if you've already been lending in two lending accounts?

If you have already been lending over the past two years and you have lent in two individual P2P loans, or two different portfolios of loans (usually two different lending accounts), you can already select sophisticated status at the P2P lending platforms you're using.

The same applies if you have lent in one lending account on one platform and selecting one individual loan on another.

Loanpad lets you upgrade faster

Loanpad* states that you can update your lender status at any time; you don't have to wait 12 months. Therefore, it's more flexible than the rest. If you already have one lending account, you might choose Loanpad as your second account if you really want to lend through it anyway, because you'll be able to upgrade to sophisticated status at both those  P2P lending platforms as soon as you get started lending at Loanpad.

Two or three lending accounts is not enough for good lending!

This article recommends to you the simplest way to get beyond the restrictions. It is not a recommendation that you just lend through two or three lending accounts. (Or, worse, two or three individual loans!)

As a rule of thumb, 4thWay's specialists generally believe it makes sense to spread your money across at least six P2P lending accounts and IFISAs, as well as many hundreds of loans. This is an extremely effective way to minimise the risks.

Don't be laughable

It's a bit laughable that such primitive steps as this will lead to you being able to call yourself “sophisticated”.

A somewhat better way to justify it is when you study the investor tests each P2P lending website now shows you and look into what the correct answers mean.

But far, far better even than that is to use 4thWay for your research. Do subscribe, please!

Read more around the subjects mentioned above:

Do “Sophisticated Investors” Have Less Legal Protection?

How To Pass The P2P Lending Appropriateness Tests.

Who Can Invest In P2P Lending?

Independent opinion: the opinions expressed are those of the author and not held by 4thWay. 4thWay is not regulated by the ESMA or the FCA, and does not provide personalised advice. The material is for general information and education purposes only and not intended to incite you to lend.

All the specialists and researchers who conduct research and write articles for 4thWay are subject to 4thWay's Editorial Code of Practice. For more, please see 4thWay's terms and conditions.

*Commission and impartial research: our service is free to you. We already show dozens of P2P lending companies in our accurate comparison tables and we keep adding more as soon as they provide us with enough details. We receive compensation from Assetz Capital, Growth Street, LendingCrowd, Loanpad, RateSetter and Rebuildingsociety, and other P2P lending companies not mentioned above when you click through from our website and open accounts with them. We vigorously ensure that this doesn't affect our editorial independence. Read How we earn money fairly with your help.

Today’s average interest rates

What is the “4thWay”?

There's the savings way, the property way, the stock-market way, and now there's the peer-to-peer lending way. The 4thWay® to save and invest.
Learn more.

What does 4thWay do?

We help people save and make more money, more safely when they cut out the banks and lend directly to other people and to businesses.

Why use 4thWay?

4thWay® is shaped by investors, bank risk modellers and a senior debt specialist, and we're governed by our users to ensure our comparison services and research are trustworthy and complete.

Why are Wellesley’s interest rates different?

Wellesley’s P2P lending rates appear higher on its own website than on 4thWay®.

This is because we calculate Wellesley’s interest rates the same way most other P2P lending websites do. We do this so that you can compare the rates more easily and so that they show a more accurate picture of what you’ll earn.

Important information before you visit Wellesley & Co.

Wellesley & Co. is primarily a P2P lending website.

But, when you visit the Wellesley website, you’ll see that it also offers “bonds”. Unlike its P2P lending service, its bonds don’t allow you to lend directly to 100+ borrowers.

Instead, you lend to Wellesley and it lends to other borrowers.

We have not risk-rated either of those bonds, but we expect that their structure makes them more risky, particularly because you’re lending to just one borrower.

Got it

×

Why are Wellesley’s interest rates different?

Wellesley’s P2P lending rates appear higher on its own website than on 4thWay®.

This is because we calculate Wellesley’s interest rates the same way most other P2P lending websites do. We do this so that you can compare the rates more easily and so that they show a more accurate picture of what you’ll earn.

Important information before you visit Wellesley & Co.

Wellesley & Co. is primarily a P2P lending website.

But, when you visit the Wellesley website, you’ll see that it also offers two “bonds”, one of which is available as an ISA.

Unlike its P2P lending service, neither of these bonds allows you to lend directly to 100+ borrowers.

Instead, you lend to Wellesley and it lends to other borrowers.

We have not risk-rated either of those bonds, but we expect that their structure makes them more risky, particularly because you’re lending to just one borrower.

Got it

×

Why are Wellesley’s interest rates different?

Wellesley’s P2P lending rates appear higher on its own website than on 4thWay®.

This is because we calculate Wellesley’s interest rates the same way most other P2P lending websites do. We do this so that you can compare the rates more easily and so that they show a more accurate picture of what you’ll earn.

Important information before you visit Wellesley & Co.

Wellesley & Co. is primarily a P2P lending website.

But, when you visit the Wellesley website, you’ll see that it also offers two “bonds”, one of which is available as an ISA.

Unlike its P2P lending service, neither of these bonds allows you to lend directly to 100+ borrowers.

Instead, you lend to Wellesley and it lends to other borrowers.

We have not risk-rated either of those bonds, but we expect that their structure makes them more risky, particularly because you’re lending to just one borrower.

Got it

×

Why are Orchard’s interest rates different?

Orchard’s lending rates appear higher on its own website than on 4thWay®.

This is because we calculate Orchard’s interest rates the same way most other P2P lending websites do. We do this so that you can compare the rates more easily and so that they show a more accurate picture of what you’ll earn.

Got it

×

Why are Wellesley’s interest rates different?

Wellesley’s P2P lending rates appear higher on its own website than on 4thWay®.

This is because we calculate Wellesley’s interest rates the same way most other P2P lending websites do. We do this so that you can compare the rates more easily and so that they show a more accurate picture of what you’ll earn.

Important information before you visit Wellesley & Co.

Wellesley & Co. is primarily a P2P lending website.

But, when you visit the Wellesley website, you’ll see that it also offers “bonds”. Unlike its P2P lending service, its bonds don’t allow you to lend directly to 100+ borrowers.

Instead, you lend to Wellesley and it lends to other borrowers.

We have not risk-rated either of those bonds, but we expect that their structure makes them more risky, particularly because you’re lending to just one borrower.

Got it

×
Back to top