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.

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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.

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ReBuildingSociety cashback

July 12th, 2013

ReBuildingSociety has recently launched a £50 cashback offer, for those lenders who sign-up and lend £5000.  It is also open to existing lenders who have not yet lent £5000.  This offer is now featured on the P2P money cashback site.

To qualify, lenders must bid on new auctions and their bids must be accepted by the borrower at the conclusion of the auction. Once these bids have been formalised into micro loans, there is no restriction on when they can be sold or the premium / discount applied.

Here are the full terms and conditions:

  1. This offer is open to new and existing members, but not those who have already lent £5,000 in live auctions at 08.07.2013.
  2. Qualifying Lenders who transfer in money and increase their total amount lent out at to over £5,000 (“Qualifying Lending”) will qualify for a Reward.
  3. The amount lent only includes bids accepted by businesses and does not include your Funds (Committed but not invested).
  4. You can increase your lending by bidding on live loan auctions only.
  5. Only one Reward per person.
  6. In each eligible case, the £50 cashback will be paid into your account within 30 days of meeting the offer conditions.
  7. There is no alternative reward to this offer.
  8. reserves the right to amend, withdraw or extend any or all elements of this promotion at any time.
  9. Limited’s registered office is 16 Queen Square, Leeds, LS2 8AJ, United Kingdom (Company No. 07885342).

Funding Circle launch C- market

July 11th, 2013
Funding Circle

Funding Circle have launched their C- market, which has an estimated 5% annual bad debt and a minimum lending rate of 11.5%.

For a basic rate tax payer, this would equate to a return of 3.4% per annum, assuming that bad debt was at estimates, with a 1% fee.  However for a higher rate tax payer, this would reduce to 1.3% per annum, which is significantly worse than for the lower risk markets.

More details to follow...

Zopa close non-Safeguard lending offers

July 5th, 2013

Zopa launched Safeguard back in May 2013, and they have now taken the decision to withdraw all non-Safeguard lending offers from 11th July.  This change isn't a surprise as non-Safeguard lenders found that their funds weren't getting any matches.

One potential drawback with Sagefuard is that lenders are now no longer able to set their interest rates, which was one of the founding principles of peer-to-peer lending, and the reason why Zopa had its name.  The zone of possible agreement was the region where borrowers and lenders could agree on an interest rate.  However, on the whole, we are supportive of this move as the provision fund should give lenders a large cushion for bad debt.

Here is the fill statement from Zopa:

We're constantly working to improve Zopa and ensure all our savers are able to earn a good return by keeping their money working. This notification is to inform you that:

  • From 11 July 2013 we will switch off the matching of money on non-Safeguard offers.
  • From 5 August 2013 we will begin a migration process to transfer any non-Safeguard offers that have not been withdrawn to a Safeguard offer.
  • From 5 August 2013 an updated version of the Zopa Principles will come into effect.

Please read on for more details about these important changes and what action may be needed.

Closure of non-Safeguard offers

Due to the popularity of Safeguard lending at Zopa, there is now almost no lending through non-Safeguard offers. This means that if you have unlent money on a non-Safeguard offer you will be missing out on interest and we would like to help you solve this. We are therefore announcing the closure of non-Safeguard lending offers.

When will this happen?

As almost all lending is now through Safeguard offers, we will disable the matching process to borrowers from non-Safeguard offers from the 11 July 2013. You can find out more about Safeguard lending on our blog.

From 5 August 2013 any non-Safeguard offers with unlent money or with Auto Top Up enabled will be automatically transferred to a Safeguard offer.Find out more in our migration FAQ.

If you wish to continue lending on Zopa you do not need to take action. However, if you have unlent money on a non-Safeguard offer, you will earn interest more quickly if you sign in to your Zopa account and move your money onto a Safeguard offer today. Read our Safeguard FAQs for how to check if you have any unlent money on a non-Safeguard offer and how to switch to Safeguard if you haven't already.

If you do not wish for your non-Safeguard offers to be transferred to a Safeguard offer, please sign in to your account and withdraw your non-Safeguard lending offers before 5 August 2013. Find out how to withdraw a non-Safeguard offer in our help section.

Updated Zopa Principles

An updated version of the Zopa Principles will come into effect from 5 August 2013. You can read the updated Principles on the Zopa site. In addition to the changes concerning Safeguard lending outlined above, the Principles reflect other new features that Zopa will be introducing over the coming months:

  • Improving Rapid Return This will help savers to transfer loans that have an interest rate below the current tracker rates. Find out more in our Rapid Return FAQ.
  • Launching loans to small businesses Savers will lend to small businesses through their Safeguard offer and benefit from the protection offered by the Safeguard fund. The Department for Business, Innovation and Skills will be providing investment to lend to small businesses on the same terms as Zopa savers. Find out more on our business loans blog.

We will keep you posted on any further developments.