P2P lender is ready for pension freedom

Peer-to-peer lending has proved that it can consistently offer high returns

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With pension freedoms only a few days away, there's an opportunity for peer-to-peer (P2P) companies to offer an alternative income drawdown for over-55s. Putting people in control of their own retirement funding gives greater flexibility in making the best use of pension savings, but for many it will be a daunting task and one where they will need support and guidance.

P2P lending has proved that it can consistently offer high returns, but for many over-55s it is not something they are likely to pursue unless they are provided with the tools and straightforward information showing how it could work for them.

One platform that is ahead of the game is Lending Works, which is introducing changes to make its offering more appealing to older people. As well as a 1 per cent bonus for over-55 lenders until 30 April it offers a Retirement Income Calculator which forecasts how much lenders could earn as a replacement for a pension or annuity.

There will also be an automated monthly income tool. This will allow lenders to withdraw a pre-selected sum monthly from the funds that are being repaid by borrowers, allowing investors to select an income to match their own retirement objectives.

The third change, and one that I think will prove to be the real winner, is that all new lenders aged over 55 will be introduced to a named customer account manager, available by telephone as well as email, to help them manage their lending portfolio.

P2P efficiencies and customer returns are partly driven by flexible and state-of-the-art IT systems. However, sometimes providers need to take a step back and weigh up what customers would really value to encourage greater take-up, and in this scenario I think the telephone hand-holding option is vital.

It is refreshing to see a company exhibit the flexibility and foresight to provide a product that meets a specific need, but to back it up with a combination of self-service tools and dedicated personal support.

It's important for providers to recognise that a sophisticated web-only option isn't going to suit all customers, so being prepared to adapt, even with "old-style" service, is something to be applauded.

No let-up in credit card best-buy scramble

The recent move by Virgin Money, offering a zero per cent balance transfer card for 36 months, has triggered the expected response from its competitors. Halifax and Lloyds Bank both increased their interest-free terms from 34 to 35 months, with balance transfer fees of 2.8 per cent and 3 per cent, while Sainsbury's Bank upped its game to 34 months and a 2.89 per cent fee.

The latest to come to the party was MBNA last week, with an improved 35-month deal and 2.79 per cent fee, putting it within touching distance of the top.

With the Financial Conduct Authority in the middle of a study of the UK credit card market, amid concerns that it isn't working in the best interests of consumers, these interest-free offers may not be around for ever.

If you've got a squeaky clean credit record and are financially disciplined, then zero per cent plastic can be a smart way to borrow. However too many people sign up, only to end up being late with a monthly payment. As a result their interest rate immediately goes from zero to 18.9 per cent. So ensure you play by the rules or you could pay a heavy price for a minor slip-up.

Andrew Hagger is an independent personal finance analyst from www.moneycomms.co.uk

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