Zopa drop 1 year loans (again)

August 17th, 2013

Zopa have announced they are dropping 1 year loans again.  These loans were originally dropped by Zopa as they were uncompetitive for borrowers, despite some lenders favouring them.  They were brought back at the start of this year, but by Zopa's admission they have not been successful with borrowers.

Here is Zopa's full statement on the Zopa Talk forum:

Just to let you know we've stopped accepting applications for 1 year loans.

We introduced 1 year loans at the start of the year, with the expectation that they would become a strong channel for new loans and provide good returns to savers.  We have found that a large number of customers have now come to us applying for 1 year loans, but unfortunately we approve comparatively few of them and for the time being we believe it is ultimately better for savers to bring in more applicants for 2-5 year loans (which are much more popular choices of loan length) than continue to assess 1 year applicants.

The P2P market still offers 1 year loans through RateSetter.

Full story »

P2P regulation - what do you want?

July 24th, 2013

The new Financial Conduct Authority (FCA) will take responsibility for peer-to-peer lending platforms from next year, and will be looking to protect both lenders and borrowers on these platforms.

The FCA is consulting the industry and c0nsumers on the rules that will apply to firms in this market.  As consumers what rules do you want to see put in place?

Funding Circle clarify postion with Santander

July 23rd, 2013
Funding Circle

Following the article we reported on in the Financial Times, Funding Circle have very kindly clarified their position, stating that the discussions that have taken place are at a very early state.

Here is the response from Samir Desai, the CEO of Funding Circle:

An article appeared in Saturday’s Financial Times that talked about the possibility of Santander entering the peer-to-peer market through a partnership with Funding Circle. If you haven’t read the article, you can do so here. I wanted to take this opportunity to clarify a few key details and share our thoughts on the subject.

Since we launched in 2010 we have been approached by numerous organisations interested in finding out more about Funding Circle. Some of these discussions turn into formal partnerships, (the Government, councils and Huddersfield University), which help to drive more businesses on to the marketplace. Others are nothing more than informal conversations.

Within this group of organisations are some of the high street banks, who are aware that peer-to-peer lending is proving increasingly popular with businesses.

At Funding Circle, we want to help as many businesses as possible. If a bank is unable to fully help a customer it has always seemed sensible to us that they introduce them to Funding Circle to see if we can help, whilst continuing to adhere to our credit criteria. This has already occurred on ad-hoc occasions with businesses telling us that their bank manager recommended they try peer-to-peer lending.

In other cases it may be possible for a bank to introduce a business customer and fund a smaller proportion of the loan amount with Funding Circle investors potentially funding the rest of the loan, so banks can manage their exposure to the business.

We were surprised to see this appear in the newspaper, not least because conversations are at an extremely early stage.

If any partnerships like this are to be agreed, we would let you know in advance. If partnerships like these can create more lending opportunities on the marketplace and help more businesses then we think it is something worth exploring further, however, I want to make it clear that nothing has been agreed and it is unclear if anything will be agreed.

Samir (CEO)

Many thanks to Samir for clarifying Funding Circle's position.  There have also been some reactions from some of Funding Circle's peers.

RatsSetter stated on Twitter:

Fascinating article in FT about Santander moving into p2p space. Great news for Funding Circle - industry taking shape

UK Crowdfunding stated on twitter:

Santander eyes move into peer-to-peer lending - clearly the banks are starting to see crowdfunding's potential

Assetz Capital published a press release:

Following the news released on Saturday, 18 July that Funding Circle is to work with Santander by the end of the year, Stuart Law, founder of Assetz Capital, the fastest growing peer-to-peer secured lending platform, commented.

"The banks are beginning to get concerned as they now know peer-to-peer lending is here to stay – it is no flash in the pan as some initially thought. However, Funding Circle’s reported involvement with Santander thrusts a spear straight through the heart of the peer-to-peer community. The relationship endangers the whole market which has worked tirelessly to build trust amongst disillusioned investors and borrowers across the UK by creating a new future for finance that doesn’t involve banks.

"Independence and a clean break from the greedy banks has been a central pillar of the alternative finance market but we’re in danger of losing all the work that’s been done if Funding Circle begins working hand-in-hand with Santander. Today, the standing of the peer-to-peer market has been dealt a potentially devastating blow – we just hope the thousands of investors earning good returns as well as the many businesses benefiting from peer-to-peer lending stick with us and know that the rest of the market is dedicated to changing the business finance markets for good."

Assetz Capital’s founders all have many years experience of lending within banks before leaving, having been disillusioned by the banking practices they had been exposed to. Most notably, Paul Moore, the HBOS whistleblower, known for warning the bank of the dangers brought on by its relentless pursuit of profit, is a key proponent for the regulation of the peer to peer lending sector. 

The comments on the official Funding Circle Forum were mixed at best.  It is certainly wise for any organisation to explore business opportunities, but a partnership with a bank may be a step too far. 

Full story »

Santander eyes move into P2P lending

July 22nd, 2013
Funding Circle

There is a very interesting article in the Financial Times regarding a possible tie up between Santander and Funding Circle.

The UK arm of the Spanish bank is in discussions with Funding Circle – one of  the largest peer-to-peer lenders – to join forces on loans to small and  medium-sized businesses, according to people close to the process.

The article also goes on to state that Santander would be looking to lend on larger loans, and P2P money would expect this to be similar to government lending on the platform.

This possibility is bound to draw some comments that this is moving away from peer-to-peer lending, and could potentially become business-only lending, excluding the lenders that started the original concept.  Government lending on the platform drew some criticism, but a move to include banks, the very same organizations that peer-to-peer lending is competing against, would attract further concern.

While it is entirely possible for a bank to start-up a peer-to-peer company, which is something P2P money would welcome, we would caution against having commercial banks lending alongside individuals.  Such organizations have such commercial presence that they could effectively dictate lending rates and have undue influence over the company.  You would also have to question why a bank would want to effectively outsource its lending, rather than perform that task internally.

We'll report on any further developments.

Full story »

ThinCats join P2P Finance Association

July 13th, 2013

ThinCats, the fourth biggest peer-to-peer company by loans arranged, has joined the P2P Finance Association, a trade body setup by Zopa, Funding Circle and RateSetter.  Between these four companies, they have arranged over 97% of all peer-to-peer loans, and currently have 95% market share.

Here is the full press release from ThinCats:

ThinCats, the fourth largest peer to peer online lending platform and current UK record holder for largest commercial P2P loan, has joined trade body the Peer to Peer Finance Association (P2PFA). This is a reflection on the growing success and expansion of the sector as well as the need to prepare as a sector for the forthcoming impact of regulation. ThinCats was launched in January 2011 and has experienced rapid success, having lent over £29 million since its launch.

The peer to peer sector is growing and developing extremely quickly. The P2PFA was born out of a desire to establish high standards of conduct and customer service and provides a clear voice to policy makers from within the sector. Earlier this year the government announced that the sector would be regulated from next April and the P2PFA is taking a leading role in discussions over how this will be implemented.

ThinCats’ MD Kevin Caley said, “We fully support regulation and the benefits this brings for consumers and by working together the sector has a much better chance of achieving a regulatory structure that does not stifle the innovation that has been shown by P2P operators so far. The P2PFA has done an excellent job of representing its members in the sector and we are excited about joining them and making the Association even more representative of the diverse nature of P2P operators.”

The UK leads the world in the development of p2p lending and proportional regulation is important if the sector is to fulfil its potential to provide a serious alternative to the banks.

Full story »