Spanish platform Comunitae has stopped operations indefinitely due to fraud. Several SMEs hat placed fraudulent offers on the marketplaces. The management says this was helped by inside fraud and they have expelled a risk analyst and initiated legal action.
Comunitae was founded in 2008. The problem was detected this October. While no figure of the monetary damage was given, management says the default level caused was to high to continue as investor demand dwindled.
P2P lending marketplace Zopa announed the plan to roll out the new IF ISA from June 15th to existing customers with target rates of up to 6.1% and also that from December 2017 new lending will not be subject to the Safeguard Fund.
Investors in Zopa Core will lend in the same risk markets as Access and Classic (A*-C) but will not be covered by the Safeguard fund. Zopa Core will offer a higher target return of 3.9% after fees and expected credit losses, as compared to 3.7% and 2.9% for Classic and Access.
The Classic and Access product offers will no longer be available for new customers, but existing customers can continue to lend through these products until 1st December, when they will be retired.
The Innovative Finance ISA (IFISA) will be launched in four phases: 1. The first stage (from 15th June) will be focused on existing customers who want to open a new IFISA (limit of 20,000 GBP) and lend through Core and Plus. 2. The second stage (1st July 2017 to 31st July 2017) will enable existing customers to sell their current loans and re-purchase similar loans in an IFISA wrapper. This will allow investors to retain Safeguarded loans in the IFISA. Any investing through new lending, or relending as capital is returned, will be onto Plus or Core only. 3. The third stage (from August 2017, but dependent on meeting demand for new IFISAs) will allow existing customers to transfer existing ISA investments with other providers to Zopa. 4. And finally, once we have met demands of existing customers, we will welcome investments from new customers.
From December 2017, new lending will not be subject to Safeguard. All loans that currently have this coverage will continue to receive it.
Zopa today says it initially introduced Safeguard in 2013 to deal with a tax anomaly that unfairly penalised peer-to-peer lenders. The fund was designed to ensure that investors only paid taxes on the net income they received from Zopa borrowers: and not bad debt. In 2015 the tax laws were updated enabling investors to claim for relief on losses from bad debt. As a result, the primary reason for Safeguard was removed. However in 2013 the Zopa website claim differed: ‘Zopa has created the Safeguard in order for you to get back all your money plus interest – without having to worry about a borrower paying you back. The Zopa Safeguard was created to step in and give you back all the money owed to you.’
Last year, based on customer demand, the company introduced Zopa Plus product without Safeguard coverage. Plus has proven popular and since March 2017 Zopa have been operating a waiting list for new investors due to the very high levels of demand. Zopa says that retiring Safeguard will allow the platform to provide greater target returns than Access or Classic (2.9% and 3.7% respectively, versus 3.9% in Core and 6.1% in Plus).
Andrew Lawson, Zopa’s Chief Product Officer, said: “We’re proud of our 12-year track record of prudent lending and have always provided positive returns to our customers. Safeguard was introduced in 2013 to deal with a tax anomaly that had led to peer-to-peer lenders being unfairly penalised. Since winning our campaign to change the tax rules, we no longer need Safeguard – as customers have proved by flocking to Zopa Plus. Now it’s done its job, retiring Safeguard, allows us to provide greater expected returns to our investors (because on average we over-fund Safeguard) whilst making the investor products even easier to understand. We’ll continue to maintain Safeguard for the rest of its life, and continue to build on our reputation for world-leading credit risk management.”
Today Zopa launched a new design for the website and introduced a new logo, which I find very simplistic.
This fresh new identity will give us a springboard for our ambitious plans to bring our products to even more UK consumers, and create radically personalised services that will help people fully realise their financial potential.
While a lot has changed – a bold new logo, icons, and tone of voice – our products still work in exactly the same way.
A year in the making
We started on this journey 12 months ago. In partnership with, KBS Albion, we took stock of who we were and where we wanted to be. We wanted to capture and build on our customer-focussed culture: ensuring that our borrowers’ and investors’ interests remain at the heart of what we do.
Since we were founded in 2005, we’ve cultivated a dynamic, customer-obsessed culture. As part of our partnership with Albion, we defined our seven core values that guide and influence our behaviour and decisions:
We are customer-obsessed.
We are positive.
We are results-focussed.
We do the right thing.
We are bold.
We work as a team.
We strive to be the best.
Our new look and tone of voice have grown out of, and continue to reflect, these values; underscoring our commitment to being open and honest in how we look and sound.
Very first opinions voiced by investors on the new design are mixed.
Earlier this month, Zopa was the first pp lender that said it will (temporary) stop to accept new lender money. With this unprecedented move Zopa reacted to lender demand that is much higher than matching borrower loan requests. Zopa described the reasons in its investor communication:
P2P lending marketplace Zopa, the first p2p lending platform, established in 2005, announced today that it will launch a bank in 2018, offering FSCS protected saving deposits. This will not replace the p2p lending product, which will continue to operate.
Zopa CEO Jaidev Jardana says “We launched in 2005 to create a richer life for everyone by making money simple and fair. We have lent over 1.8 billion GBP and inspired a 100 billion GBP global industry. We have built a profitable, scalable and viable business. Yet we’ve only just begun. We want to launch a next generation bank to drive greater choice for borrowers, savers and investors, which is good for consumers and good for the economy. We are uniquely placed to re-define customer expectations of what a bank should deliver in the 21st century. Over the last 11 years we have delivered great value to borrowers and investors whilst prudently managing credit risk. Combining our pioneering data and tech-led culture with an obsession with fairness and customer experience, we are best placed to shape the future of personal finance in the UK.”
An announcement sent via email to investors reads:
I wanted to write to you, on behalf of everyone at Zopa, to share some important news.
We launched Zopa in 2005 to create a richer life for everyone by making money simple and fair. Since then, we have lent over 1.8 billion GBP, inspired a 100 billion GBP global industry and helped our lenders earn over 75M GBP of interest. We have built a profitable, scalable and viable business. Yet we’ve only just begun.
We want to offer consumers even more choice, which is why, subject to regulatory approval, we are planning to launch a next generation bank to complement our existing peer-to-peer products.
We will continue to offer our peer-to-peer investment products.
Launching a bank, to sit alongside our existing peer-to-peer business, will allow us to create new and innovative savings and borrowing products. At launch, Zopa will offer FSCS protected deposit accounts to savers and overdraft alternatives to borrowers.
As an existing Zopa customer, we will give you the first opportunity to try out our new products. We will also actively welcome your input as we shape them.
The application process should take about 15-24 months, and we will keep you updated when we have news to share.
We believe we are uniquely placed to re-define what you should be able to expect from personal finance products in the 21st century.
Over the last 11 years, we have built an innovative, profitable and well-managed business. We have proven that we can deliver great value to borrowers and investors whilst prudently managing credit risk.
We know how to originate quality loans seamlessly online and meet our risk expectations. No new bank has that track record, and no incumbent bank has the digital expertise that we do.
We put our customers at the heart of all our decisions and obsess over how we can use technology to offer you simple, smart choices. We are looking forward to offering more products to even more people in the UK.
For now, thank you for investing through Zopa. I look forward to sharing this exciting journey towards the next generation banking we all deserve
Zopa is the first p2p lending marketplace to run a hackathon called Zopathon. Participants a challenged to code something ‘that makes interest rates more interesting’. I have seen several hackathons in the fintech space but usually they are organized by banks, service providers or accelerators and none were p2p lending specific. Zopa says they will introduce APIs, that can be used in the 24 hour event. Sign up for participants is here.
Today Lending Club has unveiled a new product offer. Borrowers in California will be able to refinance auto loans through Lending Club. Lending Club says that the opportunity is huge with currently more than 1 trillion US$ in auto debt outstanding, while just a fraction of that – 40 billion US$ – refinanced annually. The company states this represents huge potential for both Lending Club’s platform and the millions of Americans who could save by refinancing into a more affordable product. Lending Club estimates the average APR for borrowers on new loans through Lending Club will be about 1-3% lower than their current loan, translating into an average savings of up to 1,350 US$ over the life of the loan.
“Tens of millions of Americans borrow over half a trillion dollars every year to buy cars. The practices and processes of the auto lending industry offer consumers limited options and a lack of transparency. This has created a gap between the rates consumers pay and the rates they might otherwise qualify for, unnecessarily driving up debt burdens,” said Scott Sanborn, Lending Club’s President and Chief Executive Officer. “We are excited to leverage our technology and core capabilities to put thousands of dollars back in consumers’ pockets.”. “This is Lending Club’s first offering of access to a secured loan with an overall risk and return profile that’s complementary to the unsecured loans available through our platform. It’s a big step in the evolution of our platform, a win for consumers, and will give our investors access to another proven asset,” Sanborn said.
Loans will be for amounts from 5K to 50K US$ with terms of 24 to 72 months and APRs ranging from 2.49% to 19.99%.
Lending Club strives to offer a much simpler application process than competitors. While the loans are initially limited to borrowers in California it seems likely that Lending Club will expand that. An article with more details is on Lendacademy.