When it comes to investing, there are numerous questions that need to be asked, and lots of things which need to be properly understood before committing your hard-earned money
Lending Works turns three!
This week, Lending Works celebrates its third birthday, and in doing so, we as a company are reflecting on the incredible journey we’ve enjoyed over the last few years.
The idea for Lending Works was one borne out of the frustrations experienced by our founders, Nick Harding and Matthew Powell, in the world of mainstream financial services. More specifically, they recognised that allowing people to lend and borrow directly with each other can offer significant benefits and efficiencies to consumers, on both sides of the transaction, rather than simply benefitting the large financial services businesses.
After months of hard work behind the scenes, Lending Works launched its platform to the public in early January 2014, with a small team of people who gamely manned the phones in a small office in Farringdon, London. It can safely be said that things have taken off since…
In its first year, the Lending Works platform matched an impressive £5 million in loans, which in turn resulted in excellent returns for our lenders and great value personal loans for our borrowers. Lending Works laid down the marker in terms of its promise to put the customer first, with its industry-first insurance in relation to borrower defaults – something which still forms the cornerstone of our protection for lenders today.
In our second year we then enjoyed threefold growth in terms of loan volume, while we also migrated our offices to accommodate our steadily swelling team. But it was in our third year that we’ve really laid the foundations for a prosperous future. We once again saw significant growth in terms of pounds lent, while we now have a sizable contingent of around 30 employees working their magic on the ground.
Yet it was our confirmation of full FCA authorisation last October which provided the ultimate stamp of approval for all that we do, and validated our commitment to treating customers fairly and effective governance, compliance and risk management. As a further feather in the cap, we were also the first of the eight-strong Peer-to-Peer Finance Association to receive this green light.
FCA authorisation, ISAs and the future
For lenders in particular, receiving FCA approval – following an exhaustive review - has two major benefits. Firstly, it provides important reaffirmation that your platform of choice to invest your hard-earned money is responsible, compliant, financially stable, transparent, and has stress-tested processes in place across the board.
The other major benefit, of course, will be the availability of the new Innovative Finance ISA, which we’ll be launching in the coming weeks. Full FCA authorisation, and subsequent approval from HMRC as an ISA manager, is a prerequisite for peer-to-peer lending platforms to be eligible to offer this new tax-free wrapper, and the opportunity to earn returns within an ISA will now make lending with us even more lucrative for consumer investors.
But while the Lending Works ISA will be at the core of what we expect to be a very successful year for our platform, we have numerous other initiatives and partnerships lined up which are set to significantly move the needle in 2017.
“As a company, we look back on the last few years with a lot of pride, and it is incredibly rewarding to see the progress we’ve made since Lending Works opened its doors,” commented Nick Harding. “It’s been three hugely successful years for us, and we’re proud of the fact that we’ve stayed true to our values every step of the way, focusing on delivering value to our customers rather than simply looking after ourselves.
“But, as ever, our focus is very much on the future, and how we can take things to the next level. With our ISA set to launch very soon, and some other exciting plans in the pipeline, we can say with a high degree of confidence that the best is very much yet to come.”
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.
As the tax year end approaches, the financial services industry readies itself for a flurry of activity. That's in large part because, with just a couple of months to go, the so-called 'ISA season' is upon us.
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.
As 2018 draws to a close, with our bellies full of Christmas turkey, it's only natural to look back on the past 12 months and reflect. No doubt, it's been a turbulent one economically and politically, and not everyone has had it all their own way.