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