Peer-to-peer reviews

March 21st, 2016
Smart Money People

With more and more consumers looking at investing and borrowing using P2P platforms, we’re in the process of displaying independent P2P reviews here on the P2P money website. This is the first review syndication within the P2P space.

Mike Fotis, founder of Smart Money People said, “Since we launched in 2014, our mission has been to increase trust and transparency in financial services. We’ve become the leading site for independent banking reviews, and extending into the P2P industry will help us to decode this industry for many more consumers.”

To write a review, pick a company here and click the link.

Your reviews can help to better inform consumers and help to act as a self-regulating mechanism (something the FCA's consumer panel talks about as 'consumers as co-regulators').

TWINO allow lenders to choose currency

March 17th, 2016

Latvian based European peer-to-peer lending company TWINO will be allow lenders to choose their currency instead of requiring lenders to convert funds to Euros.  They are facilitating this by hedging the currency.  Read the in-depth conversation on the P2P Independent Forum.

Here is the statemeny from TWINO:

One of TWINO promises is that we protect investors from currency risk. Thus, while investing on TWINO you don’t need to worry about Polish Zloty, Danish Krone or Georgian Lari appreciating against euro, as every transaction on the platform is performed in EUR.

However, investors from the UK still face the risk of EUR appreciating against GBP, which might lower their returns. Therefore, next week we are planning to launch a major upgrade that will remove the currency risk for investors, who hold their investable assets in British Pounds, equalizing the benefits of investing on TWINO with Eurozone investors.

The functionality will allow investors to choose the currency that they want to invest in (either EUR or GBP), and every transaction on TWINO will be processed in the chosen currency (including deposits, withdrawals, investments, repayments, etc.).

We will provide a further notice when the new functionality launches, and will be reaching out to existing investors, asking if they want to convert their TWINO accounts to GBP.

We are glad to be the first platform in Continental Europe to provide such functionality and hope some of you will benefit from it!

Zopa new products live

March 17th, 2016

 Zopa's new products, which we recently reported, are now live.  If lenders wish to use Zopa Access or Zopa Plus then they need to log-in to their account and update their relending preferences.

Here is the announcement from Zopa:

We are delighted to tell you that our three new lender products are now ready and waiting for you to use!

Simply log into My Zopa to see the new look lending pages. You now have the option to lend in the three new products: Zopa Access, Zopa Classic and Zopa Plus.

When you lend your money your capital is at risk and is not protected by the FSCS.  Our risk statement has all the details.

If you have re-lending turned on then your monthly repayments will now automatically be recycled into Zopa Classic. If you want to begin lending in Zopa Access or Zopa Plus, simply update your funding preference to that product. You can either deposit new money into those products (remember you need at least £1,000 to start lending in Zopa Plus) or turn re-lending off and move your repayments over to your chosen product as they come in to your holding account.

Our award winning customer services team is on hand to support you with any queries you might have about getting started with the new lender products. You can also provide feedback on what you do and don't like about the new products by contacting our product team.

We look forward to hearing what you think!

ArchOver completes record breaking loan

March 10th, 2016

ArchOver has successfully raised a record breaking £2.3million loan to Scottish based Duradiamond Healthcare.

Here is the full press release:

ArchOver via its crowdlending platform has successfully raised £2.3m to support the growth and development of Perth-based occupational healthcare company Duradiamond Healthcare. It is believed to be the largest non-property related working capital facility ever raised by any platform anywhere in the world.

Commenting on the loan, ArchOver CEO Angus Dent said: "We are obviously delighted that we have been able to assist Duradiamond Healthcare, an exceptionally fine Scottish company that we are convinced is destined for greater things. However, this is also ArchOver's largest loan by far and so we are equally pleased for ArchOver and its growing band of loyal lenders. Everyone involved has worked very hard to bring this campaign to a successful conclusion."

"Above all, this makes a massive statement about the effectiveness of crowdlending in the modern financial marketplace. We have demonstrated that we have the systems, structure and capacity to offer a genuine alternative to the banks when it comes to providing flexible finance to young growth companies. It is a good outcome for all concerned."

The loan replaces a facility provided by RBS of £1.8m and increases the working capital available to the company. Duradiamond Healthcare needs additional working capital to service its growing business. As a result of the four new contracts, Duradiamond Healthcare is expecting its turnover to increase by almost a fifth to £14m this year, rising to £17m and £21m in 2017 and 2018 respectively.

Chief Executive Dr Chris Pugh said: "We are delighted with this new form of finance which will enable us to fulfil our growth opportunities across the UK."

The deal was introduced by Neil Davidson, founder and MD of Alderburn Finance Solutions based in Edinburgh.

Zopa launch new products

February 17th, 2016

Zopa had announced that it is launching some new products and retiring the old products in March. The main differences are that lenders will no longer able to select loan term, but they can select if they wish to benefit from a higher return with the additional risk of being outside Zopa's safeguard mechanism. Zopa has hinted at this possible move during discussions at LendIt Europe in October 2015.

Zopa launched their previous safeguard products in May 2013, and finally closed their non-safeguard products in July 2013.

So how will these changes affect lenders? Zopa attempts to answer this in one of their FAQ's:

Currently we offer a 3.8% rate for 1, 2 and 3 year loans and a 5.0% rate for 4 and 5 year loans. The Zopa Classic rate will be a blend of these two markets.

Due to the nature of our loans, where customers can pay back early for no extra fee, the time it takes for money to be returned to lenders in the short and long markets does not vary greatly. Our five-year loans tend to be repaid in two years, with our three-year loans being re-paid on average in 1.3 years.

So if you are currently lending in up to three year loans, then your predicted rate will likely be slightly higher in Zopa Classic, but some of your loans will be repaid over a longer period. If you are currently lending in up to five year loans, then your predicted rate in Zopa Classic may be slightly lower, but some of your loans will repay sooner.

Assuming funds are gradually transferred to "Zopa Classic", lenders currently in the shorter market may benefit by an increase of around 0.5% AER in their returns, although their funds would take longer to be repaid. Conversely lenders currently in the longer market may see a reduction of around 0.5% AER in their returns, but their funds would be repaid sooner.

One of the products "Zopa Plus" has a 2% AER premium on "Zopa Classic" but lenders would no longer be covered by the safeguard fund. Lenders should therefore expect bad debts which will erode their return, as with any other non-provision fund peer-to-peer lending product. With defaults in Zopa in 2014 at 1.15% in the lifetime of a loan, a 2% annual equivalent rate bonus would seem beneficial. However this market is being opened to D and E grade borrowers, so we should expect bad debt to be higher than previous years. This product will have a higher minimum lending amount to ensure lenders are sufficiently diversified.

Here is the full statement from Zopa:

Today, we are very excited to announce the next generation of Zopa lending products!

Over the past months we've been listening to our lenders about what they want from their lending products, and what matters most when it comes to lending through our platform. You've told us ease of access and the ability to take on more risk are key to offering a broader, more appealing product set. Based on your feedback, we'll soon offer more choice and providing benefits from recent regulatory changes, particularly around the tax status of peer-to-peer interest.

In mid March, we'll be replacing our existing lender products with three new ones: Zopa Classic, Zopa Access, and Zopa Plus. Together, these products will offer much more choice and flexibility to both existing and new Zopa lenders. As with all peer-to-peer lending, your investments are not covered by the Financial Services Compensation Scheme (FSCS), so your capital is at risk. If you wish to access your money by selling your loans, this is dependent on other lenders being available to purchase those loans.

We are sharing indicative rates today, and exact rates will be announced on 1st March. As with our existing rates, the new product rates will vary with the market, so if borrower interest rates go up, the rates on your new loans will go up too and vice-versa.

The New Zopa Products

Zopa Classic (4-5%) - Safeguard lending

Zopa Classic will give customers the security of Safeguard and access to their money at any time, subject to a 1% fee. This product is most similar to what our lenders have today, however what's new is that it combines 1-5 year loan terms.

Zopa Access (3-4%) - Safeguard lending with fee free easy access

For customers who value easy access to their money, we've created Zopa Access, which has Safeguard but which has no access fee and a slightly lower expected return.

Zopa Plus (6 -7%) - Non-Safeguard lending, some added risk with higher returns

For customers who are willing to accept more risk for higher returns, we've created Zopa Plus. Over the last year we have been testing the performance of D and E rated borrowers with our institutional lenders, and based on these tests, we would like to offer loans with D and E rated customers to all lenders. With the introduction of Zopa Plus, customers can lend across A*-E risk markets. Loans in Zopa Plus are not Safeguarded, and so it will suit customers who don't require this additional security as they are comfortable lending their money via Zopa's diversification model. Predicted rates of return will be higher but will come with some additional risk.

When the new products launch, what will happen to customers' loans that are in the short and long products?

If you're a current Zopa lender, then as we retire the existing short and long products, your repayments will cycle into the new Zopa Classic product. So the rates will stay the same on your existing loans, but as they get repaid, the repayments will be used to buy new loans within the Zopa Classic product.

How will customers be able to have multiple products? How can they be funded?

Customers will be able to have multiple lending products with us - you can have an Access, Classic and Plus product - however only one can be selected for new funds at any given time.

If you are an existing customer and you wish to move your existing loans from Zopa Classic into one of the other new products, you can choose to turn off re-lending and allow repayments to collect within the holding account and then allocate those funds to a new product. Alternatively, you may sell your loans and purchase new ones within a new product.

For answers to more of your questions, please visit our FAQs page.