UK P2P Lending Summary 2018
- The Financial Conduct Authority continued wading through requests for full authorisation from P2P Lending platform – the ‘Big 3’ among the stragglers in 2018 taking the number of FCA approved platforms over 70. Most of these going on to launch their own Innovative Finance ISAs
- Among the H2 2018 FCA approvals were Lendy who have been experiencing increasingly high levels of arrears and defaults on development finance loans. Shortly after their authorisation came through, so did a legal action bought by one their borrowers against their participating Lenders
- P2P platform Collateral entered administration after operating without correct regulatory permissions. Lenders are still waiting (6 months later) for a clearer picture of what they might expect to get back. Collateral offered property development loans and bridging, as well as pawnbroking-style finance.
- The FCA published its long awaited post implementation review and accompanying proposals for P2P Lending regulation. The need for risk and fee transparency make perfect sense, as does a drive for clear and accurate information for lenders. Meanwhile proposals for Crowdfunding-style marketing restrictions have been met with criticism across the industry for being too broad-brush and having little consideration for the fundamental differences between equity and debt investing. A policy statement is expected in H2 2019
- New ‘Open Banking’ regulations with effect from last January required all UK-regulated banks to offer their customers the ability to share their financial information securely with other authorised providers. In a P2P context, Open Banking could, with the borrower’s permission, give lending platforms API access to bank accounts – helping to evidence creditworthiness and ongoing servicibility of payments through the life of the loan. Zopa have since taken things a step further and have recently been granted a banking licence
- Stricter ‘General Data Protection Regulations’ coming into effect from 25 May, tightened the rules around collecting, storing and processing personal data for us all. GDPR included ensuring platforms like Proplend have the appropriate Opt In ‘permissions’ to contact platform users and prospects. Proplend Lenders were asked to Opt In to continue receiving emails prior to 25 May but can change their communication preferences at any time via their Dashboards
- Continued growth of the P2P Lending industry – Total UK peer to peer lending to date is thought to be approaching the £15bn mark, with P2PFA platforms’ lending now over £10bn
- Innovative ISA volumes continue to rise steadily and contribute to overall industry growth – this despite a persisting lack of awareness in the product and the ‘unhelpful’ one per ISA type subscription limit. With volatile stock markets and the base rate still languishing below 1%, P2P lending via an ISA offers a credible alternative with ‘real’ returns in excess of inflation (currently 2.5-3%)
- As the market grows and P2P becomes more mainstream, the industry has seen a number of successful capital raises by platforms (including Proplend) in 2018. Funding Circle will become the newest member of the FTSE 250 after their capital raise, listing at £1.5 billion
- Specialist P2P ratings and research agency 4thWay unveiled a new lending platform evaluation model. Proplend retains its top rating for risk adjusted returns – moving up to 2nd overall in their overall comparison tables with one of the lowest risk rankings.
Proplend Summary 2018
- Over £50m lending now facilitated through the platform and over £100m commercial property funded
- More than £20m ‘returned’ to Lenders including more than £16m capital repaid over £4m interest (much of it tax-free via IFISA and pension investment)
- Increased loan origination – 24 loans originated in 2018 with a current active loan book of £35m. A productive first year working more closely with the National Association of Commercial Finance Brokers (NACFB), but with more direct loan enquiries fielded too
- Despite a couple of loans repaying late, still no technical loan defaults or investor losses in over 4 years. 12 loans were repaid in full in 2018 with our average loan to value remaining around the 60% mark
- Having been rated 4-star since our first review almost three years ago, we now have an overall 5-star rating on Trustpilot. Thanks to all Lenders who have taken the time to share their experiences and recommend the platform via our 2018 ‘Refer a Friend’ offer
- Proplend’s Auto Lend facility launched in August – offering a ‘hassle-free’ automated allocation alternative for our safest Tranche A loan investments. The facility has already contributed to greater investment diversification both in terms of the average number of loans per Lender and average number of Lenders per loan
- Our secondary loan market (‘PLE’) continues to offer liquidity and diversification opportunities to both existing and new Lenders. Whilst sales are not guaranteed, loan parts made available by individual investors are typically snapped up within 24 hours with accrued interest passed on in addition to the face value
- Back in April we launched our enhanced Lender Dashboard and marketing website. A more mobile-friendly, intuitive interface was rolled out, complimented by additional Lender and Borrower help content – greeted by some very encouraging feedback. The Proplend logo got a bit of a makeover too earlier in January
- Successful private Seedrs fundraising to existing Lenders – exceeding our target amount. Not content with investing through the platform, we responded to requests from Lenders wanting to invest IN the platform too
- Proplend founder and CEO Brian Bartaby included in the P2P Finance News 2018 ‘Power 50’ having “built up his commercial property lending platform into a recognised P2P brand”
Proplend – Looking Forward to 2019
- We’re expanding the team to help increase origination to satisfy our growing Lender base. With half a dozen new loans already lined up for January 2019, new additionx to the Borrowing and Marketing Teams will help ensure we increase availability throughout the year – particularly around ISA season
- While manual loan selection and investing remains popular, our new Auto Lend facility has been well used. We understand Auto Investing isn’t for everyone but for those who can benefit from it we’re looking to add additional personalisation to Auto Lend in 2019 to enable individuals to tailor their preferences
- With so many new and existing Lenders opening a flexible ISA with us, we wanted to help individuals keep track of their net subscriptions and flexible (returnable) withdrawals. This important information will be made available via account Dashboards early in 2019
- Having fed back on the proposals in late 2018 we eagerly await the FCA policy statememt on P2P lending. Whilst it’s unclear precisely what changes will be announced and the implementation period afforded, we believe we are well placed on a number of the anticipated requirements and have already started working on a roadmap for compliance for a few different scenarios
- Unfortunately Brexit uncertainty looks set to continue for a while yet. As you might expect, we’ll be taking a more cautious credit approach given what we’re already seeing with high street retail and in the property markets. We believe our past due diligence and security requirements should stand Lenders in good stead for our existing facilities, whilst our flexible approach to underwriting enables us to continue to match demand from creditworthy commercial borrowers with investors seeking attractive risk-adjusted returns.
As usual, we’d like to finish by thanking all Proplend Lenders for their support throughout 2018 and offer a warm welcome to all our new Lenders and Borrowers. We wish you and your families Many Happy Returns for 2019 and beyond!
Related to this post …
Want to find out more about the Innovative Finance ISA? Browse our comprehensive online IFISA Guide
Top 10 reasons to invest with Proplend (in 2019)
Risk adjusted returns – find out more about why P2P lending rates vary
10 things to Remember Remember for all P2P Lenders
Proplend News Platform property lending passes £50m
Borrowing News Loan enquiry to drawdown in less than a week – Proplend show it can be done
