Quick guide to the Lending Works Shield
Market leading threefold protection
Our number one priority at Lending Works is earning and maintaining the trust and confidence of our customers and, within that, protecting your money. Lending Works offers market leading threefold protection to our lenders which includes the Lending Works Shield. The Shield ensures against borrower default risk, fraud and cybercrime.
No other peer-to-peer lender offers this.
What does the Lending Works Shield protect lenders against?
We protect our lenders from both the specific and systemic risks posed by borrowers including missed repayments and defaults, fraud and cybercrime. Specifically, we protect against the following risks:
Missed payments and borrower defaults
Our lenders are protected from the risk of missed payments and borrower defaults, whatever the reason. Whether small numbers of borrowers default because of isolated unemployment or illness, or large numbers of borrowers default because of systemic economic issues such as a recession or financial market crash, our lenders are protected.
Our fraud prevention systems combine the knowledge of a broad group of industry experts, including identity verification consultants who advise the government, credit reference agency experts and CIFAS who are the UK’s leading fraud prevention agency. However, in the unlikely event that our robust and sophisticated systems are penetrated and fraudulent applications are approved, our lenders’ money is fully protected by insurance.
Our system has been designed and built by technology experts who work with both the government and private sector. Our technology and security systems have been designed and tested to protect our customers’ data and to protect against breaches of our internal systems. However, in the very unlikely event that this protection fails, our lenders’ money is fully protected by insurance.
How does it work?
The level of protection we provide to our lenders is threefold. The first is a set of heavily scrutinised processes and policies that we use every single day: the underwriting process. The second is a company structure that is specifically designed to protect our lenders: the Ring-Fenced Trust. The third, and most significant, is our Lending Works Shield, an industry-changing progressive step for peer-to-peer lending consisting of a reserve fund coupled with insurance policies which protect against risks including missed payments and borrower defaults.
1. Meticulous underwriting
Our team is comprised of financial services industry experts who ensure that only the most eligible borrowers are approved, utilising the most effective underwriting techniques including:
Equifax credit check - to check credit files
Affordability check - we check income, outgoings, bank accounts and debt
Identity check – we use sophisticated software to verify identities
CIFAS check - we check each borrower against the national CIFAS register to help prevent fraud
2. Ring-fenced Trust
Lenders’ money is held within a Trust which is administered by a not-for-profit company. All funds held within this Trust are ring-fenced from the day-to-day operations of Lending Works in a segregated client bank account. The Trust has an agreement with a back-up services provider who, irrespective of the status of Lending Works, will manage the Trust, collect the debts due and return all money due to our lenders.
3. The Lending Works Shield
The Shield is a unique feature designed to provide market leading protection to our lenders. It consists of two parts:
- Reserve fund which is held within the ring-fenced Trust. This protects against missed and late payments and ensures lenders receive their expected returns. The reserve fund is constantly growing as a portion of the fee payable by each of our borrowers is taken to the reserve fund.
- Insurance policies which protect against borrower defaults, fraud and cybercrime. No other peer-to-peer lender offers this
Lending Works is authorised and regulated by the Financial Conduct Authority but is not a bank, and so the Lending Works Shield is not part of the Financial Services Compensation Scheme (FSCS). The Lending Works Shield is also not an insurance product offered directly to lenders.
In summary, we understand that earning and maintaining the trust and confidence of our customers is fundamental, which is why we have gone to such great lengths to protect our customers. We believe that we should do all of the hard work, so you don’t have to. Instead, you can benefit from our great returns with market leading protection.