P2P cashback site launched

December 14th, 2011
P2P Money

P2P Money have launched a cashback site that will allow new users to be rewarded for using peer-lending.  Currently Funding Circle and Zopa are featuring with rewards of £25 gift vouchers.  The Funding Circle offer will expire at the end of December so act quickly !

Quakle post-mortem

December 8th, 2011
Quakle

There have been articles over the last few days in the Daily Mail and This is Money entilted "Savings fears as loan firm Quakle goes bust" and today in the FT entilted "Peer-to-peer loans company closes" about the demise of Quakle.  This was bound to cause some waves, but I believe it is important to keep this in perspective.  Quakle itself made less than 0.1% of all peer-loans so it was tiny in comparison to the market leaders Zopa, Funding Circle and RateSetter.

I remember reading about Quakle on the Zopa forum and after looking at the model I decided it was not for me.  There appeared to be less checks performed on borrowers than would otherwise happen elsewhere.  Less than a year after launch Quakle closed to new business.  However this isn't the same as a bank going out of business as the contracts are between the borrower and the lender, not the borrower and the company, and are still legally enforceable.  Quakle's collection agency are still chasing payments, and further action can and will be taken against borrowers who don't pay, just like any bank.

The peer-lending industry remains strong and is continuing to grow.  There have already been announcements that there will be more new entrants to the peer-lending industry next year.  Lets hope that these new entrants will join the P2P Finance Association which requires all companies to ensure high minimum standards of protection for consumers.

Danesfield make changes

December 5th, 2011
Danesfield

Danesfield have also announced some changes to their peer-lending platform today.  Interestingly - excuse the pun - they will now be paying 1.75% AER on unlent funds.

I am writing to advise you of some major changes at Danesfield this week which will affect the way your funds are currently lent out, on our social lending forum.

We at Danesfield Finance (DFAI) have been listening to our members and in order that we may offer a better service to people looking to lend money through the social lending platform we have taken the decision to re vamp our web site.

From Wednesday 7th December any outstanding loan applications will be cancelled, this will release funds back into your lending accounts.

You will then have to log into your account and re allocate how you would like your funds to be distributed.

Our changes, we feel will help to get your funds lent out a lot faster, hence pay you the return you are looking for a lot quicker, we have also added another service for our lenders, which is, we will pay you interest of 1.75% on any un allocated funds in your lending account.

I am sorry about the inconvenience that this will cause, but we feel our new approach will safeguard both Lenders and Borrowers alike.

It is good to hear that their web site will be updated, as it is still showing data from April 2011.

Zopa tweaks borrower fees again

December 5th, 2011
Zopa

Zopa has taken a further decisive step to reduce fees again today, reducing the fees for A* borrowers wanting to take out a loan for £7500 or more over 36 months to just £10.  Last week the fees for a comparable loan would have been £130, so this is a huge reduction.

Zopa tweaks borrower fee structure

December 4th, 2011

Zopa has confirmed today that it has tweaked the fee structure it charges borrowers.  Previously Zopa charged all successful borrowers a fixed fee of £130, however it has raised this fee in the B, and C and Y markets to £150 and £200 respectively.  In addition this fee has been increased in the A and A* markets to £160 for loans of £3000 to £3499.  However this fee has been reduced in the A* market to £80 for loans of £7000 to £7499, £20 for loans of £7500 to £12,999 and £30 for loans £13,000 and over.  This is detailed on P2P Money's page on peer-to-peer companies.

Giles Andrews, CEO of Zopa stated on the Zopa forum:

Interesting comments. We are trying to boost borrower volumes while maintaining our average fee. So far we have been more successful at the former than the latter as our average borrower fee has fallen. I don't particularly like charging B,C and Y borrowers more, but 1) we need to in order to run the promotional rates in A*, which have driven higher volumes and 2) it reflects the much higer processing costs we incur in these markets, where we have to process a significant multiple of applications more (so we both buy much more data and spend longer reviewing them) for every successful disbursal, and the time spent underwriting each case is also significantly higher. It certainly doesn't reflect a desire to close these markets. In fact, we haven't seen a reduction in the number of applications in these markets since the change, indicating it makes business sense, even if their proportion has declined. Interestingly both the US P2P players have much larger differentials in fees for their higher risk markets.

Lower fees for larger loans also make sense as the total value of a loan, including the future lender fees associated with it, increases with loan size. The vast bulk of loans over £7k are in the A and A* markets - the distribution is even more skewed than for smaller loans.

Finally, the new fee structure isn't set in stone and we will be tweaking it as we learn, in pursuit of the objectives I set out at the beginning of this post.

I'm slightly puzzled by the increase in the A* market for loans of £3000, but the reduction to £20 for loans of £7500 clearly demonstrate that Zopa are trying to raise the average loan size which would be good news for lenders.  The interest rate for an £8000 loan over 36 months for an A* borrower has decreased to 6.1% APR.