Lending Works CEO Matthew Powells reported an influx of more than 500K GBP deposits within 3 hours after launching the Lending Works Innovative Finance ISA (IFISA). Lending Works’ IFISA product offers 4% (up to 3 years) or 4.7% (up to 5 years term) tax-free for investments on the p2p lending marketplace. However Lending Works, anticipating the huge demand, has launched the offer with an upper ceiling: ‘We’re anticipating a significant spike in lending volumes as a result of the new ISA. Because we want to match your money swiftly at all times, we will only be accepting ISA monies from lenders in fixed, periodic tranches totalling Â£1 million at a time. Once this limit is reached, we will then temporarily be closing this window of opportunity until further notice.’ as stated on the company website. It is expected that Lending Works might lower rates after this threshold is met.
Investors can draw down either interest, or interest and capital over the term of the loan, or reinvest the interest. A recent survey of Lending Worksâ€™ existing investors found that 88% plan to open an IFISA, with around a third expecting to invest between 10,000 GBP and the maximum threshold of 15,240 GBP of their annual ISA allowance into the IFISA before the end of the tax year in April. In the next tax year the allowance will rise to 20,000 GBP. Continue reading →
Lending Works announced that they received full authorisation by the FCA. It is the first P2PFA member to receive that status. Lending Works plans to launch their IF ISA offer in January 2017. Some smaller new entrants already had full authorisation, while the main players still operate on interim permission awaiting approval.
Lending Works writes:
We’re fully authorised by the FCA
We are thrilled to announce that we’ve today received official confirmation from the Financial Conduct Authority (FCA) of our full authorisation as a financial services provider. This is a momentous occasion for Lending Works, and also means we are the first of the peer-to-peer lending platforms operating under interim permission to receive this approval.
It marks the end of a thorough, 12-month review in which our processes, systems, policies, financials and levels of compliance and risk management have undergone intense scrutiny from the UK’s primary financial services regulator, and this green light from the FCA represents the ultimate stamp of approval. We hope that this news will further underscore your confidence in us, and all that we stand for.
Our ISA is coming soon
With this FCA approval in hand, it now paves the way for us to apply to become an ISA Manager with HM Revenue & Customs. Once this formality is complete, we’ll be eligible to deliver the Lending Works Individual Savings Account (ISA), a product we plan to launch in January. We are waiting until January to launch our ISA for a number of reasons, namely: the expected waiting period for obtaining ISA Manager approval, the fact that we have other major releases planned for the next couple of months, avoiding launching before or during the Christmas break, and to align the launch with the January-to-April ‘ISA season’.
New branding, website and user dashboard
In a few weeks’ time, we will launch new branding that we hope is befitting of our position as an innovative financial services technology firm. In addition, we will launch an easy to navigate, simple-yet-informative new website and intuitive new user dashboard. We will introduce you to the new brand, website, logo and lender dashboard closer to the time of launch, but we are confident it will further enhance your customer experience.
Finally, we have also got several new major partnerships going live soon too. These partnerships will bring more and more high-quality borrowers to our platform, which in turn will benefit you, our lenders.
But for now, we hope you will share in our delight at having made this significant step up with the FCA – a launchpad we believe will drive us towards even bigger and better things. …
Lending Works is an online marketplace lending platform for unsecured personal loans. We offer extremely competitive lender returns and fixed rate, flexible loans up to Â£25,000 over 1 to 5 years.
What are the three main advantages for investors?
Lender protection â€“ our unique Lending Works Shield consists of a reserve fund to cover loan arrears and insurance to protect against the primary reasons for borrower defaults, including loss of employment, fraud and cybercrime. No other peer-to-peer lender offers this. In addition, our underwriting processes are extremely robust, resulting in a 0.00% arrears and default rate since launch
Great returns â€“ our lender returns are extremely competitive and are protected by the Lending Works Shield, so the rate you see is the rate you get
Flexibility â€“ lenders can access their funds early using our Quick Withdraw facility, or can automatically reinvest monthly repayments using Auto Lend
What are the three main advantages for borrowers?
Low cost loans â€“ our loans are offered at market leading rates. By directly connecting our customers and cutting out the bank, weâ€™re able to cut down the cost of a loan significantly
Simplicity â€“ by utilising the latest technology and being an exclusively online platform, weâ€™re able to pay out funds within one working day of completing the simple online application process
Flexibility â€“ borrowers can make overpayments or settle their loans early at any time, without charge
What ROI can investors expect?
Lenders can expect returns of around 4.1% over 3 years, up to 6.0% over 5 years. These rates are protected by the Lending Works Shield so there shouldnâ€™t be a need for lenders to factor in bad debts.
How did you start Lending Works? Is the company funded with venture capital?
We started building Lending Works in 2012 and launched the platform in 2014. The idea was to create a simple and safe platform to enable ordinary consumers to get a fair deal. We tried to make lending and borrowing through Lending Works as simple as possible â€“ most of our customers do not have the time or desire to actively monitor and manage their account. Thatâ€™s why we opted to steer away from an auction-based or â€œmarketâ€ model and introduced features like Auto Lend to automate the reinvestment process.
The company is funded primarily by angel investors. Weâ€™ve raised around Â£4m in funding to date which has enabled us to navigate the launch period successfully. Weâ€™re now focused on driving exponential growth through innovative partnerships and new loan origination channels.
Is the technical platform self-developed?
The technical platform is completely bespoke and was initially built by an external digital services agency. Since launch weâ€™ve brought all development activity in-house which allows us to innovate quickly and to regularly release updates. We hired our first Head of Technology, Michael Raasch, in September. Michael has over 25 yearsâ€™ experience working for large investment banks and has been fundamental in preparing our platform for large scale. Continue reading →
P2P lending service Lending Works launched today. The service says its unique selling proposition is that it offers lenders actual insurance and thereby more protection than the provision funds scheme major UK competitors like Zopa and Ratesetter do offer. Reading the fine print, there is insurance, but capped at 10% bad debt, which should be sufficient in the current market situation: ‘The Lending Works Shield provides cover of up to 10% of all Lending Works loans and so provides a market leading 17 times cover‘ [compared to a stated 0.58% industry wide personal loan borrower default rate]. Lending Works is open to UK residents with a UK bank account.
I also noted that Lending Works allows lenders the option to exit their investment prior to the loan duration if they accept a fee of 0.6% (or 20 GBP) whichever is greater.
Available loan terms range from 1 to 5 years.
Lending Works says it has raised 3.5 million GBP prior to launch.