Peer-to-peer bridging lending company The BridgeCrowd have revamped their website and logo. The updated website has a greatly improved customer experience with the ability for lenders to view and interact with their loans. For lenders that have not yet signed-up to The BridgeCrowd yet, the P2P money website is running an exclusive cashback offer of £250 for new lenders who invest a minimum of £5000.
P2P secured bridging lender, the BridgeCrowd (www.thebridgecrowd.com), has recently updated its website and added a host of new features. This comes at a time where the company has seen remarkable growth over the past 18 months as it continues to occupy a strong space in the 2nd charge bridging arena.
The company offers a return of 1% per month to investors secured by loans over UK property. Investors choose their own loans to enter. To date over £60,000,000 in capital and interest has been returned successfully to investors.
The new features include a fully online view of the current live and historic loan book, a loan performance update system and an investor E-Wallet through which investors can invest capital into loans and manage their account and interest.
Louis Alexander, MD, commented that a key to the success of the BridgeCrowd has been the trust placed in it from the investors; “our investors have shown a great appetite and commitment to the company. We wanted to reward that loyalty by making the company more transparent and the best way to do this was to have a fully online loan book and an account that investors can manage online.”
The investors are also happy about the recent updates as well. Simon Thompson, an investor since the company was formed in 2013 commented that “the new features have made investing in the BridgeCrowd (www.thebridgecrowd.com) much simpler and easier to manage. The company has always shown great returns, and we will now look to increase our investments into the P2P loans offered throughout the platform.”
Luke Roughly, CTO, stated that one of the goals of the new features was to enable the company to scale up its lending by accepting more investors into its platform and giving them simple manageable tools to view and interact with their loans. Since the new website went live, we have seen more and more investors join the company and committing funds into the loans.
The BridgeCrowd occupies a broad space in the bridging industry offering loans up to 70% LTV on 1st charges and 68% on 2nd charges across residential owner occupied and BTL properties as well 60% LTV on land and commercial properties. Louis Alexander feels that the company have worked hard since the birth of this concept to deliver strong returns for investors based on secured bridging loans over property and that hard work has paid off with recognition and recommendations coming from various sectors of the financial community. With the new website and confidence from investors the BridgeCrowd, like Great Britain, is open for business!
The old logo is shown below.
RateSetter have announced in their July statement email sent to lenders that they plan to retire the 3 year market from October. Unlike some of their competitors this is the first time that RateSetter has actually retired a market. It is likely some lenders will be disappointed with this decision, but it is understandable given that the 3 year market comprise less than 5% of new lending. Lenders still have the choice of 5 year, 1 year or the rolling monthly market with competitive rates.
Here are the details sent to lenders within their July statement:
After years of good service, today we are announcing the retirement of the 3 Year market from 5th October 2016.
When RateSetter launched in 2010, investors could choose between the Rolling and the 3 Year markets. Over time we added the 1 Year and 5 Year markets and made other adjustments so that our range now caters to three distinct investor needs:
- Rolling investment with no early withdrawal fees
- 1 Year investment (with early withdrawal fees)
- Longer term investment (with early withdrawal fees)
Today, we recognise that the 3 Year market has been superseded by the 5 Year market as the choice for investors seeking a longer term investment.
RateSetter go into more detail on the reasons behind closing the 3 year market on their blog:
Why are you closing the 3 Year market?
The 3 Year market has become less popular ever since we introduced the 5 Year market and now accounts for less than 5 per cent of new investments. Both markets repay capital and interest monthly but investors vote with their wallets and are telling us that they prefer to lend in the 5 Year market.
In light of this, we think it is sensible to simplify our offering and have three markets. Investors who are happy investing over a longer term can invest in the 5 Year market; those that prefer to invest for shorter periods or prefer to have cheaper access can invest in the 1 Year or Rolling markets.
What does this mean for investors?
From 5 October 2016 the 3 Year market will be closed to new investment.
What if I have money in the 3 Year market?
If you have existing investments in the 3 Year market, you will continue to earn the same rate of interest on that money as your lending is repaid.
From 5 October 2016, any borrower repayments which are set to reinvest into the 3 Year market will be paid into your Holding Account by default, so that you can choose how to invest them.
If you would like to keep earning interest on that money, you can of course set repayments to be automatically invested in the Rolling, 1 Year or 5 Year markets by logging in to your RateSetter account and then selecting “Reinvestment” on the left hand menu.
Congratulations to Folk2Folk on their successful move to their new office in Corwall, demonstrating that peer-to-peer companies can be successful outside the capital.
Here is their full press release:
On 22nd July, Folk2Folk, a leading Peer-to-Peer lender based in Launceston, celebrated their move into a new head office with a summer party attended by MP for North Cornwall, Scott Mann, the Mayor of Launceston, Brian Hogan, and many leading local business owners from across the South West.
Folk2Folk have moved in to their new national headquarters, Number One, to help accommodate their rapidly expanding business which has enjoyed great success since launching in 2013. Folk2Folk have a number of offices across the South West and is rolling out further branches in market-towns across the country later this year and in 2017. In June 2016, the peer-to-peer lender passed the £100 million milestone of loans funded, and this move into the historic building in Launceston demonstrates the success of their business model and the level of demand for their local lending service.
Folk2Folk are one of the UKs largest peer-to-peer lenders with a unique business model which focuses on lending within local communities: bringing together investors seeking attractive and secured returns, and borrowers looking for access to affordable capital to develop and grow their business. More than 70% of Folk2Folk investors are repeat lenders, demonstrating the strength of Folk2Folk’s product. Folk2Folk is expanding its workforce and recently appointed a new Head of Business Development and Sales, to help widen the company’s reach and deepen its professional networks throughout the country.
Folk2Folk are the anchor tenant of the new premises, Number One, which previously served council offices and has sat unused for a number of years. The quality and flexibility of space at Number One will provide business space to new tenants and help support the South West’s growing business community.
Jane Dumeresque, Folk2Folk CEO said “We are thrilled to move into Number One, which provides excellent workspace for Folk2Folk’s head office base as we expand our business across the country. Folk2Folk has enjoyed great success since launching in 2013, and Number One provides the perfect environment to nurture growth for us and other businesses looking for quality office space.
Scott Mann, MP for North Cornwall, said: “It is a great pleasure to be here to mark the opening of a new centre for business in the South West and support the continued growth of a local success story, Folk2Folk. As a new business centre in Launceston, Number One offers flexible office space for vibrant growth businesses from the South West and beyond, providing an environment in which they can thrive.”
Christine Farnish, Independent Chair of the Peer-to-Peer Finance Association has written an open letter to Andrew Bailey, Chief Executive of the Financial Conduct Authority, concerning comments made during a House of Commons' Treasure Select Committee meeting. The Financial Times reported that Andrew Bailey statied that one of his concerns was that peer-to-peer lending platforms “get very near” to promising investors they will get their money back and will receive fixed returns and that the peer-to-peer companies taking fees without the loan risk was like the securitisation of subprime loans before the financial crisis.
Dear Mr Bailey,
I write, further to your oral evidence to the House of Commons’ Treasury Select Committee last week, with particular reference to your answers to questions asked by Chris Philp MP, raising concerns about the risks associated with peer-to-peer lending; a potential incentive mismatch related to fee structures within the sector; and the issue of reserve funds.
Peer-to-peer platforms exist solely because they create value to consumers on both sides of the platform: investors are able to earn fair predictable risk adjusted net returns that can outperform other investment products, whilst borrowers can access fast and flexible finance. Platforms offer borrowers a form of investment, and explicitly are not an alternative form of savings account: peer-to-peer products are not positioned as a deposit and nor is there an implicit guarantee.
In responding to one of Mr Philp’s questions, you cited the differential risk profile between a deposit contract and that for asset management; it is important that potential investors understand where peer-to-peer platforms exist on that spectrum. Parliament has recognised that peer-to-peer lending is distinctive and constitutes a new form of financial services activity – designated in the Regulated Activities Order and recognised as different from both bank deposits and conventional equity investment products. In considering its approach to peer-to-peer finance, I would hope that the Financial Conduct Authority would start from first principles, based on risks and benefits to consumers, recognising that it is neither about banks nor about asset management. Such an approach would be consistent with policies, publications and pronouncements made by the Authority.
Whilst it is the case that, within the peer-to-peer lending sector, there are different asset classes each with their own risk-return profile, overall, peer-to-peer platforms offer a lower risk profile than stocks and shares with less volatility. Individual platforms, as well as the sector in general, acknowledge responsibility in ensuring that potential investors are aware of the particular risks of this form of investment, and are committed to the principles of fairness and clarity.
The Peer-to-Peer Finance Association has been consistent from its outset in arguing for, and embracing, an appropriate level of regulation to facilitate innovation and the development of this form of alternative finance, whilst providing protection for consumers. Platforms continue to work closely with the Financial Conduct Authority on the full authorisation process, and current regulatory requirements are supplemented by the Association’s own Operating Principles, requiring all members to commit to high standards of business practice as well as exemplary levels of transparency: details of every single loan originated in the marketplace must be published. The value of this openness enables individual platforms to be judged on the basis of the credit risk performance of the entirety of their loan books.
As the growth of the peer-to-peer lending sector and the base of investors and borrowers has expanded so rapidly, the challenge of ensuring that all participants are fully cognisant of the nature of the opportunities and risks have intensified, and a process of familiarisation for consumers is recognised as critical. The sector accepts its responsibility for ensuring that those investing in peer-to-peer products understand the nature of their investment, and appreciate the degree of risk incurred. The Association audits the websites of individual platforms frequently, and feedback is provided. All members are required to publish in full the details of their loan books to ensure that investors are able to hold platforms to account on credit assessment.
I believe that a degree of mis-understanding has arisen in respect of the structure of fees within the sector. It is Mr Philp’s contention that there is a mis-alignment of incentives where those operating peer-to-peer lending platforms receive fees upfront based on the volume of loans originated. In your response to Mr Philp’s question (Question 61 of the session), you suggest that structuring lending through taking fees upfront creates uncertainties. A significant part of the fees charged for peer-to-peer lending are earned over the course of the life of the loan, and are not paid at the outset. Peer-to-peer lending platforms recognise the importance of ensuring that incentives are not skewed merely in favour of writing loans, irrespective of their long-term performance: an increasingly significant amount of income comes to the platforms during the later period of the life of the loans. Platforms do not engage in maturity transformation.
The existence and use of reserve funds in peer-to-peer lending is not universal, and specific to those platforms who have designed them into their business model. Where a peer-to-peer lending platform decides to create a reserve fund, it is important that investors understand that this does not infer a guarantee for their investment.
Mr Philp’s final proposition (Question 62) advocated co-investment of a proportion of a peer-to- peer lending platform’s loans to concentrate attention on making good credit decisions. As indicated above, the peer-to-peer lending sector has embraced a level of transparency which is unrivalled in financial services, and it is possible to make judgements about the calibre of credit decisions made by each individual platform in respect of their entire loan book through material which is already published. I would argue that ensuring that investors are empowered to appraise a peer-to-peer lending platform’s credit decisions and performance obviates any requirement to mandate co-investment. I would observe that it is not a requirement for asset managers to co-invest, despite incurring greater levels of risk within their investment portfolios.
The Peer-to-Peer Finance Association welcomes the Financial Conduct Authority’s recently- announced post-implementation review of crowdfunding rules as an opportunity to ensure an appropriate balance of regulation between protecting investors and borrowers, without stifling innovation and competition. It is important that consumers are able more easily to differentiate between the various levels of risk in the multitude of alternative finance investments and make informed decisions which reflect their own preferred exposure: for example, an equity-based crowdfunding product for a start-up enterprise carries a very significantly-greater level of risk compared with most peer-to-peer lending products. The regulatory regime should reflect these divergent risk profiles.
I look forward to continuing to contribute to the on-going debate about where the appropriate balance of regulation should lie. Consumers should receive appropriate levels of protection, but they also value the improvements which innovation in customer service, credit risk management, good value products as well as cost and product transparency which have accrued through the evolution of peer-to-peer lending: opening up this form of loans to retail investors, previously the exclusive domain of financial institutions.
I hope this is helpful, and am copying this letter to Chris Philp MP, and to Rt. Hon. Andrew Tyrie MP, as Chairman of the House of Commons’ Treasury Select Committee.
Independent Chair: Peer-to-Peer Finance Association
Funding Knight was placed into administration on 28th June and immediately bought by GLI for £750,000 with the promise of a further £1million of capital to finance ongoing operations.
GLI Finance is a specialist provider of finance to small and medium sized enterprises. Its ordinary shares are quoted on the AIM (GLIF) and its issued zero dividend preference shares are listed and traded on the main market of the London Stock Exchange (GLIZ). The loans are provided to SMEs through a variety of finance platforms in which GLI Finance has an equity stake.
The platforms in which GLI Finance is invested vary by geography, industry, size of lending and by type of lending. They include Global trade Finance, UK and US SME Lending, Offshore Lending, UK invoice discounting, European invoice discounting, Global multi-asset crowd funding and UK property-backed lending.
GLI Finance's ordinary shares closed virtually unchanged on the day, but has fallen from a peak of 58p in July 2015 to a low of 22.1p on Monday 27th June. The ordinary share price closed at 28.75p before the result of the EU referendum was announced.
Here is the press release on the London Stock Exchange:
The board of GLI announced in its strategic review update released on 16 February 2016 that it had not been possible to agree a way forward between GLI and FundingKnight, an online peer to peer lending platform. As a result, GLI became a passive investor with respect to its interests in Funding Knight Holdings Limited ("FKH"), the holding company for the FundingKnight group. These include a 23.4% interest in FKH's issued ordinary share capital with a carrying value of £2.481 million, a £1.001 million investment in FKH's preference share capital together with accrued interest of £0.290 million thereon and £0.525 million of loans provided by GLI to FKH.
On 28 June 2016, Greg Palfrey and Steve Adshead of Smith & Williamson LLP ("S&W") were appointed as administrators to FKH. The board of GLI is pleased to announce that, shortly after S&W's appointment, the Company agreed to acquire the respective entire issued share capitals of Funding Knight Limited ("FundingKnight", FKH's operating subsidiary) along with FKH's other subsidiaries, Funding Knight Services Limited and Funding Knight Corporate Services Limited, both of which are dormant (the "Acquisition"). Consideration of £0.75 million was paid in cash at completion of the Acquisition. As part of the terms of the Acquisition, GLI has also committed to provide Funding Knight with at least £1 million of further capital to finance its ongoing operations.
Funding Knight recorded unaudited turnover and a post-tax loss of approximately £0.61 million and £1.17 million respectively in the financial year ended 31 March 2016. FundingKnight's unaudited net assets at 31 March 2016 were approximately £0.13 million. £0.45 million of the consideration for the Acquisition will be applied by S&W in partial settlement of the Company's loan to FKH. The remainder of GLI's interests in FKH will be written down to £nil in the Company's balance sheet.
Andy Whelan, CEO of GLI said
"We believe FundingKnight is a fundamentally good business with strategic value. By acquiring the business at a low entry price, we will help secure the continued employment of the FundingKnight team and provide reassurance to the investors in FundingKnight loans and FundingKnight's SME client base that have existing loans or are seeking to borrow. In the medium term, we will be seeking to maximise the potential of FundingKnight in a way which is consistent with our strategic plans."