Saving Stream default repaid in full

March 1st, 2017
Saving Stream

Saving Stream have announced that they have repaid all lenders for loan PBL020, along with interest.  There was a shortfall in the realised amount following the sale of the asset, but this has been covered by the Saving Stream provision fund.  This has been welcomed by lenders.

Speaking to Saving Stream at LendIt Europe last year the company stated that they believed lenders would be fully repaid.  The additional of interest after the default was unexpected, but perhaps welcomed by lenders who had continuted to purchase loan parts after the default.

Here is a copy of the email sent to lenders, which borrower details redacted:

We would like to announce the full repayment of the above loan. All investors should now have their capital credited to their Saving Stream accounts. The accrued interest to date will be included in the end of the month interest payments.

In December 2014, Lendy Ltd advanced £1,700,000 of Saving Stream investors funding in bridging finance to [redacted], to fund the [redacted] Garden Centre project. When sale negotiations fell through nine months ago, the loan went into default. Since then Lendy Ltd and our appointed agents have been working closely with the borrower to effect a satisfactory outcome.

We are pleased to confirm that today the matter concluded with the successful sale. While the project did not meet its original sale objective, it was sold for £1.3m, with the difference in capital made up by our Provision Fund. As a result none of the 1,156 lenders in this loan will lose any capital. Over the past two years, lenders have collectively earned over £170,000 in interest on this loan, based on the gross annual return of 12%.

Our auditors have conducted a thorough review of this loan and are satisfied that Lendy Ltd advanced the loan on a sound commercial basis and that our underwriting and due diligence were conducted in a stringent and thorough way. Users of the Lendy platform can be assured that Lendy takes a responsible approach to lending, and will always take every possible precaution to prevent a loan defaulting.

The loan was defaulted in May 2016 when the sale of the asset fell through and lenders stopped receiving interest at that time.  At the time the loan was already a year overdue and Saving Stream stated that lenders may not receive all of their capital if there was any shortfall in the value realised against the loan amount.

Here are the comments posted in May 2016:

As the borrower has not repaid the loan, Lendy is, on your behalf and at Lendy's option, enforcing the default procedures set out in the loan agreement with the borrower (clause 5.2). Once the assets have been realised Lendy will repay your investment.  In the event that there is a shortfall then Lendy will pay you a proportion of the recovery proportionate to the amount invested by you in the loan (clause 5.3.1)

The reaction on the P2P Independent Forum was positive.  A regular contributor on the forum stated:

Also worth noting that the borrower paid £1,475,000 for the Garden Centre, so the LTPV was 115% - The purchase value should always be disclosed to investors, in this case, it wasn't. If you work out the actual loan, it does seem that this was a 100% loan, with no collateral coming via the borrower at all.

I wonder if we will ever find out what the deal was with Lendy having a 10% share in the failed business (i.e. the borrower)... I guess not

In any case, a satisfactory result for all involved; good to see that nobody lost any money, but I hope investors don't see it as a precedent.  This was on the old T&Cs and the PF is still discretionary

The provision fund wording has also been modfied.  Below is the old wording:

The Fund will have a minimum balance of 2% of the total live loan amount at any time. Every time a new loan is made a portion of the fee charged to the borrower is paid into the Provision Fund (the amount is dependent on the loan size). It is also important to note that in the event of a default in excess of the Provision Fund value it may not be possible to cover all claims from Saving Stream investors.

Below is the new wording, with differences highlighted in bold.

The Fund will aim to have a minimum balance of 2% of the total live loan amount at any time. Every time a new loan is made a proportion of the fee charged to the borrower is paid into the Provision Fund (the amount is dependent on the loan size). If the Provision Fund is used to cover a shortfall in asset disposal, then it may take time to top the Provision Fund back up from company cashflow.

Rebuildingsociety obtain full FCA authorisation

February 28th, 2017
ReBuildingSociety become the latest peer-to-peer lending platform to obtain full authorisation from the Financial Conduct Authority.

Here is their statement on their blog: has been awarded full authorisation from the Financial Conduct Authority in recognition of our compliance with sector-specific regulations.

We are very excited to share news of this major achievement and important milestone with our community. Authorisation means that we meet the rigorous standards set by the FCA and that we can soon start to offer the Innovative Finance ISA.

Although we have been operating under FCA rules on Interim Permission since April 2014, being granted full authorisation helps us to continue building on the important relationships of trust we have with all our clients. We are proud to have achieved this milestone ahead of many other platforms, which we believe is testament to our small but dynamic team, systems, processes and controls.

It has been a long journey, consuming considerable energy and investment, since we applied for full authorisation in November 2014. We have continued to grow as a business and improve on our core processes throughout. The regulatory landscape is continuously changing, and we will make sure we stay abreast of developments that arise from our post-implementation review.

We are committed to delivering a top-quality service to all our customers, to assist investors by providing multiple investment options and to assist our borrowers in finding business finance that is more than just a financial transaction. We are now taking pre-registrations for the IF ISA and will confirm once we can on-board new accounts. Please look out for further updates; we know that many of you are keen to benefit from frequent, compounded returns.

“Thank you to everyone who has helped us in this journey. At a time when monetary policy discourages investing for the future, we’re pleased to see more people taking control of their finances. A more congruent alignment of risk and reward is facilitated by transparent platforms like ours. For too long the traditional Financial Services industry has obscured who takes the risk and who takes the reward. So many new investors are surprised to learn about how much margin is taken between the demand and supply of capital, but after a few years of trialling our service, our most prolific investors continue to be our most supporting ambassadors.”

Landbay launches ISA

February 20th, 2017

Following on from Lending Works last week, Landbay has launched their own Innovative Finance ISA.  The ISA has a minimum investment of £5000, with a maximum of £15,240 (set by the government), raising to £20,000 next April.  Lenders are able to transfer in ISAs from previous or current tax years.

Like the classic Landbay account there are no fees with the exception of a £50 transfer out fee, if lenders wish to transfer their ISA to another provider, and a £50 fee if lenders exceed their annual ISA allowance.

New customers can earn £50 cashback when they invest £5000 in the Landbay ISA.

Lending Works ISA suspended

February 9th, 2017
Lending Works

After reporting yesterday that Lending Works had launched their new Innovative Finance ISA, the platform announced today that they have temporally suspended ISA applications.  This is due to £2million of funds being received within 24 hours.

Here is the statement on the P2P Independent Forum:

We received over £2m in just 24 hours, with lots more ISA transfer applications coming through in the post today. Great news, but we've had to temporarily close new ISA applications in order to manage rates/queues without compromising on the quality of loans available on the platform.

We'll hopefully be reopening applications next week...

This may be the sign of things to come as the larger peer-to-peer platforms start offering ISAs.  These platforms may have a difficult job, trying to balance supply and demand, but this will inevitably lead to a reduction in lending rates.

Lending Works ISA now live

February 8th, 2017
Lending Works

We reported in October that Lending Works had become the first major peer-to-peer platform to receive full authorisation from the FCA. Following this, Lending Works have today announced they have launched their new Innovative Finance ISA. The platform expects a significant uptake after a survey showing that 88% of customers plan to open an IF ISA.

Here is the email sent to lenders:

We're delighted to confirm that we have today launched the new Lending Works ISA!

We've undergone immense scrutiny and assessment from the FCA to get to this point - not to mention left no stone unturned in creating a world-class user experience in the process - so to now be able to deliver this new product is something we're thrilled about. For you, it means many years of tax-free, lucrative returns from lending through our platform lie ahead*.

However, please note that in order to ensure we are able to match your money with borrowers quickly at all times, we will only be accepting ISA capital in fixed tranches, with a collective cap of £1 million at a time. Once this cap is reached, we will temporarily no longer take in any further ISA monies until further notice.

We expect this initial cap to be reached sometime this week, so we strongly suggest that, to avoid any disappointment, you should aim to set up your new ISA, transfer in funds, and make lending offers as soon as possible.

To set up your ISA, please:

  • Sign in to your account and click 'Open your ISA'
  • Complete the ISA application form
  • Accept the declaration and click 'Open my ISA'

Once this has been validated, you will be able to transfer money into your ISA and make lending offers by following the usual procedure.

Should you require any further information relating to the rules/laws pertaining to ISAs, or on how to set up your Lending Works ISA, please do feel free to take a look at the ISA section of our Help Centre and/or our recently-prepared Ultimate Guide to IFISAs. Alternatively, our customer service team is at the ready to assist you via email or by phone.

We look forward to sharing this exciting new chapter of our journey with you!

Here is a copy of the press release:

Lending Works, the first peer-to-peer lending platform to have insurance protecting lenders against certain borrower default risks, today becomes the first major UK platform to launch an Individual Savings Account (ISA).

The new peer-to-peer lending ISA - which is better known as the Innovative Finance ISA or IFISA - is a new category of ISA set up exclusively for P2P lending. The IFISA can only be offered by platforms who have attained both full authorisation from the Financial Conduct Authority (FCA), and subsequently ISA Manager approval from HMRC.

Lending Works received confirmation of both permissions in late 2016, and the company has now become the first member of the industry-body Peer-to-Peer Finance Association (P2PFA) to launch the new ISA product.

Nick Harding, founding CEO of Lending Works, commented:

“We are delighted to announce the launch of the Lending Works ISA, giving investors the opportunity to earn higher rates of interest by using their ISA allowance to invest in peer-to-peer loans. This launch comes in response to unprecedented demand by investors, who are looking to new asset classes for income growth, at a time when other investments and bank savings accounts are often delivering mediocre returns, if at all.

“Our lenders tell us that they are crying out for yield generating products, such as our ISA. As the first major UK peer-to-peer platform to launch an IFISA, we are focused on developing a world-class customer experience and look forward to seeing our investors reap the benefits.”

Significant investor demand expected

Consumers will be able to subscribe up to £15,240 each year with Lending Works, although they have the option of splitting this across all three ISA types – cash, stocks & shares and IFISA. This allowance is set to increase to £20,000 in 2017/18. In addition, there will be no cap imposed on the transfer of funds accumulated over previous tax years within existing ISAs into an IFISA, meaning the benefits are likely to be substantial.

Lending Works is anticipating a significant influx of new investors on the back of the launch, with a recent survey of existing investors confirming that 88 per cent plan to open an IFISA, with roughly a third (31 per cent) expecting to invest between £10,000 and £15,240 of their annual ISA allowance to this wrapper before the tax year is complete.

Harding added:

“Given the extraordinary level of interest from both existing and prospective customers in the build-up to the launch of our ISA, we expect to see a large spike in the volume of funds coming to our platform over the next couple of months as savvy investors look to make the most of this year’s ISA season.

“But what excites us most is the prospect of delivering sustained, long-term benefits to our customers via the Lending Works ISA for many, many years to come.”