On 4 June 2019, the Financial Conduct Authority (FCA) released its new regulatory framework for peer-to-peer lending (P2P); a Policy Statement known as PS19/14. As you might imagine, it's a document which, following a three-month consultation, is a hefty read of no fewer than 102 pages.
2017: the year that was
2017 is a year which we will look back on with great pride. In 2016, a lot of groundwork was laid. We expanded our team, bringing in high-class talent across various spheres to better enhance our model. Our coffers were boosted by an influx of investment. We launched a new website and brand. We also committed considerable resources into compliance, and it was therefore no coincidence that we became the first P2PFA member to be granted full FCA authorisation last October.
Such solid foundations left us well poised to excel in 2017, but even our own lofty ambitions were exceeded. As a platform, we have now facilitated more than £80 million in loans, which means we’ve lent more in 2017 than we had in the previous three years combined. Nearly 6,000 people have benefitted from a convenient, low-cost loan in the past 12 months, while we now have over 3,700 lenders earning inflation-beating returns on their money.
We expect this exponential upward trend to continue in 2018, but for now, we’d like to take a moment, and look back on what has been an immensely successful year for Lending Works. Among the many highlights, here are five which really stood out for us…
1. The launch of our ISA
Following on from our nod of approval from the FCA, we also became the first P2PFA member to launch our ISA in February. The Innovative Finance ISA had been eagerly anticipated by savvy investors across the UK, so to be hailed as the first major platform to deliver this product to consumers was a momentous achievement. But, rather than simply patting ourselves on the back, our true satisfaction has come from observing the benefits which this tax-free wrapper has brought to our lenders. In the first two months alone, we saw almost £9 million invested via Lending Works ISAs, and these have continued to attract the majority of lender capital in the months since. As peer-to-peer lending continues its inexorable march towards the mainstream of personal finance, we expect volumes lent through the ISA to soar in the future. But we will always remember 2017 as the year where it all began.
2. Glory at the Moneywise Customer Service Awards
The Moneywise Customer Service Awards is an event Lending Works has had a strong affiliation with in the past couple of years. However, this year we made history by defending our crown as the ‘Best P2P Platform for Savers’, seeing off some strong contenders in the process. With nearly 50,000 consumers casting their votes across various categories for the favourite financial services providers, it’s no wonder that these Awards are considered the ‘Oscars’ of their kind. To receive such a seal of approval is a great honour for Lending Works and our customer service team, although we pride ourselves on our service delivery to both lenders and borrowers. It was thus gratifying to receive the runner-up gong of ‘Highly Commended’ in the Most Trusted Personal Loan Provider category for the third consecutive year too.
3. The launch of our partnership with Revolut
In these fast-changing times, there is no doubt the future of UK financial services lies within the realm of fintech, and the disruptors therein. In March, Lending Works came together with up-and-coming digital challenger Revolut to unveil a new partnership. By combining Revolut’s unique mobile platform for foreign exchange (and vast customer base) with our technologies, Revolut customers can now receive an instant payout when approved for a loan. In terms of holiday finance, it’s proven to be a ground-breaking customer experience, and a strong indication of how collaboration across the fintech spectrum can deliver unrivalled convenience and value to consumers. We look forward to launching many more such partnerships in the future.
4. Enhancing our technology stack
From day one, incorporating cutting-edge technology into the way we write loans has been a top priority. Of course, this is a moving target, and requires constant innovation to ensure that Lending Works delivers the smoothest, safest and quickest customer journey possible. It is also essential that we have a robust and sophisticated process to select the loan applicants we approve. This year, we’ve taken innovation to a new level, introducing a plethora of new in-house technologies, including using Machine Learning to make our loan pricing more effective, dramatically increasing automation for loan customers, enhancing our credit modelling through data science, and continuing to enhance on our architecture and infrastructure using cutting edge technology innovations such as micro services.
By combining these technologies with years of industry experience within our team of credit risk analysts, we have consolidated our place at the forefront of loan underwriting within the peer-to-peer lending industry (and UK financial services as a whole) in 2017, and this is an area we will continue to invest heavily in for years to come.
5. Milestones galore
In April, Lending Works celebrated an important milestone: £50 million in loans written. It is a measure of how far we have come this year that we've since left such a figure in our wake (we forecast to reach £100m in Q1 2018). Nevertheless, breaking new ground eight months ago was something to be celebrated, and, given that Lending Works is not even four years old, such volumes are indicative of the level of faith consumers are exhibiting in our platform to deliver value and efficiency.
We also celebrated the significant achievement of the UK peer-to-peer lending sector reaching the £10bn mark. As an industry, we are united in our desire to see P2P establish itself as a frontrunner in consumer finance, and as these ceilings continue to be shattered, realising this objective becomes ever more inevitable. All the graphs are pointing in the right direction. All the technology is in place. And consumers are increasingly becoming aware of the benefits platforms like ours bring to the table. Roll on 2018: the best is yet to come.
Our website offers information about saving, investing, tax and other financial matters, but not personal advice. If you're not sure whether peer-to-peer lending is right for you, please seek independent financial advice, and if you decide to invest with Lending Works, please read our Key Lender Information PDF first.
For all the resilience the UK economy has shown, there is no doubt that this year's ISA season is set against a backdrop of uncertainty. Whatever the pros and cons, Brexit, and a lack of clarity on what our future economic relationship with the EU will look like, has left us at a crossroads.
The Lifetime ISA (LISA), announced in 2016, would prove to be one of George Osborne’s last flagship gestures to UK savers and investors as Chancellor, eventually launching against a backdrop of anti-climax a year later in April 2017.
Over the last decade, there can be little dispute that the reputation of mainstream banks – and particularly the so-called ‘Big Four’ (HSBC, Barclays, Lloyds and RBS) – is at its lowest ebb.
The peer-to-peer (P2P) lending industry is now regulated by the Financial Conduct Authority (FCA). The regulatory framework has been designed to protect customers and promote effective competition.
Loan underwriting is the process that we undertake to analyse all of the information provided by each loan applicant and their credit file to assess whether or not that applicant meets our minimum loan criteria. As part of that process all data is verified, analysed and summarised to paint a picture of each applicant.
When you earn interest from a regular bank savings account, for example, the bank automatically deducts basic rate tax (currently 20%) before paying your interest. With interest earned from peer-to-peer lending, tax is not deducted automatically so lenders will need to declare their income to HMRC.
With political parties jostling for position amid a series of Elections, and the ongoing spectre of a snap General Election looming large, the Labour Party put forward a policy last week which has proved to be a talking point: increasing the minimum wage to £10 per hour, and extending this to workers under the age of 18.
The starting gun has been fired to seek out Mark Carney's successor as Governor of the Bank of England (BoE), but he will nevertheless remain in his post until January 2020.
The vexing issue of social care, set against a backdrop of an ageing population trying to sustain itself, refuses to go away, and policy ideas invariably prove divisive.
On a daily basis, diligent readers of financial publications consume a wide range of economic data, which act as key performance indicators regarding the state of the UK economy.