Funding Circle have announced that they are to exit property loans by mid 2018. Funding Circle state the reason for this is to focus on their core product of small business lending.
Lenders on the P2P independent forum were disapointed with this development as a number of them had focused exclusively on property loans.
Its a shame , it worked OK for me. I suppose that FC must know their business though & some of the borrowers must have taken liberties. I wonder how soon it will become apparent where the business will drift away to , if it does.
This may have a positive effect on Lendy (formerly Saving Stream) who have focused on property loans in recent years.
Here is the statement on the Funding Circle blog:
Funding Circle’s long term goal is to become the first choice for small businesses here in the UK and across the world. By attracting thousands more businesses to the platform, we can offer you many more lending opportunities, allowing you to continue to earn an attractive, stable return. To meet this goal, we have taken the decision to focus on our core small business lending product in the UK and our other markets and will scale down new property development lending, expecting to stop all lending by mid-2018.
We are proud of the lending we have facilitated to small developers since 2014. The borrowers you have lent to have built thousands of homes and credit performance has been strong; loans have generated a 7% annual return* (as of 10th April 2017) and you have earned more than £22m in interest.
By focusing on our core product you will be able to help thousands more small businesses to access finance and grow. Over the last year you have lent record-breaking amounts, with approximately £280m lent to small business borrowers in the first three months of 2017. We expect this trend to continue.
It’s important to note that this decision is not related to credit performance of property development loans, which have outperformed expectations over the last three years and we expect this to remain the case.
We will continue to work on your behalf to service all existing property development loans. There will still be opportunities for you to lend to experienced property professionals over the next 12 months.
With only a short window remaining within this tax year, the majority of peer-to-peer platforms still have not received full FCA authorisation, and are therefore unable to offer the new Innovative Finance ISA (IFISA). However there are a number of P2P platforms that have been successful in obtaining FCA authorisation and HRMC registration as an ISA manager. The members of the P2P Independent Forum have compiled a list of the various platforms that are currently offering an Innovative Finance ISA.
We have take a copy of this list as of 1st April but for the up-to-date list please refer to the P2P Independent Forum.
|Abundance||5% to 12% AER
Typical 7.5% AER
|£5||Yes||2% AER return on ISA cash balances until 31st May 2017|
|Bassett & Gold||6.12% AER||£1000||Yes||No fees|
|Capitalrise||10% to 14% AER||£1000||Not yet||£35 transfer out fee|
|Crowd for Angels||Not specified||£100|
|Crowdstacker||Typically 5% to 7% AER||Not specified||Yes||£15 fee to sell investments through platform|
|Crowd2Fund||Estimated 8.7% AER||Not specified||Yes||Secondary market available|
|Downing||Typically 4 to 7% AER||£100||Yes|
|HNW Lending||Not specified||£10,000||Yes||£75 transfer fee|
|Landbay||Expected 3.75% AER||£5000||Yes||£50 transfer fee|
|LandlordInvest||Up to 12% AER||£100||Yes||0.5% secondary market fee if you choose to sell early|
|Lending Crowd||Target 6% AER||£1000||Yes||1% withdraw fee|
|Lending Works||3.6% AER||Not specified||Yes||Rates for 3 year and 5 year ISA respectively|
|Money & Co||Typically 7% AER||Not specified||Not specified|
|Property Crowd||7% to 10% AER||Not specified||Yes|
|UK Bond Network||Typically 7% to 12% AER||£5000||Yes||1% cashback bonus|
Thanks to the members of the P2P Independent Forum for their tireless work in investigating these platforms.
As we reported earlier, today two platforms received full authorisation from the Financial Conduct Authority. The second of these was FundingSecure. They have also announced that they will be offering an Innovative Finance ISA once their application has been approved by HMRC.
Here is the section from the email sent to lenders:
We are happy to announce that FundingSecure is now fully authorised by the FCA. Significantly, this means we can now apply to be an ISA manager. Our application has now been submitted and we hope to be able to offer an IFISA within the next 2 months.
Look out for a separate email giving details of how and when to apply.
Two more peer-to-peer lending platforms have received full authorisation from the FCA today. The first of these today was Ablrate.
Here is the article on the Ablrate website:
We are pleased to announce that Aviation and Tech Capital Limited, the company that owns and operates Ablrate has gained full authorisation from the Financial Conduct Authority.
We have spent many long hours creating appropriate safe guards for lenders and borrowers and we have developed new and innovative systems to ensure transparency. All of these have been looked at by the FCA and have been approved.
Our agreement system, that creates your own bespoke lending agreement all the way through your ownership of that loan, was created to show that Ablrate loans are between you and the borrower as they should be. Some platform have chosen to have documentation and terms and conditions covering the relationship between the borrower and the lender, we chose to make it a physical solution with an agreement system that can be audited by our lenders.
Regulation is necessary, and to be affective regulation has to be adaptive. This has been a challenge for platforms with different models and a challenge for the FCA facing those different models. I have to thank my team for meeting this challenge, working long hours and putting up with a grumpy CEO on many occasions. It would also be remiss of me not to praise the professionalism and pragmatism of the regulator. The people we dealt with in all sections of the FCA have been helpful and professional, this gives us the confidence to be able to innovate, which is what our sector thrives upon, without fear of banging our heads up against a regulatory wall!
The most important people to thank is really you, our community. You have been quick to give us feedback, both positive and negative, this has allowed us to shape our procedures, our systems and technology to a stage where the regulator wants us to be; managing risk, being clear and fair, treating customers fairly but also bringing something new and exciting to the market place.
This is a big day for our company and our community, but it's just the start. We are now able to plan better, innovate better, expand faster, and do this to the benefit of our existing lenders and borrowers and those who join our community in the future.