Peer-to-peer lending sites: MSE guide discussion

Yes, if I recall the discussions correctly the three non-Lendy owners of the limited company started trying to wind it up at about the same time as three relatives formed a new company of similar nature. My guess is that they would try to buy the place out of administration for a price lower than the amount advanced in the loan and maybe even lower than the price the first firm paid for it. Apparently an offer has been made by someone but it's not known who. More ... less than desirable stuff .. if it turns out that it is the new limited company set up by the relatives.

On the more positive side of things, Ablrate's new developer team is in place and doing assorted updates to the platform at the moment.

I think Zopa divide your stake into 100 portions and then match with other investors to a borrower.

Ratesetter appear not to do so, so all your money may end up with one borrower. However, they still have the contingency fund if that borrower goes down. If the contingency fund is overwhelmed and goes down, they then put ALL loans into runoff, and everyone then gets a share of any losses.

RateSetter have messed up again - 7pm and repayments due this morning still haven't been paid, and judging from the thread on p2pindependentforum I'm not the only one.

This sort of thing is happening far too often with RS.

I'm concerned about the reserve funds that p2p companies hold on investors' behalf.

When p2p companies started, it was said that reserve funds may in the future be run by an independent trust. Zopa said, that as they were a fast evolving sector, the P2P owners needed direct & flexible access to administer how the investors' reserve funds were spent and to set the size of the reserve required.

I think that now that P2P companies have become a mature sector, the investors' reserve money needs to be increasingly separated from the P2P business.

We may end up with some of the same directors who've mess-up in a P2P company boardroom, simply moving to the room next door and voting in private as 'The Reserve Fund Board' to amend lenders' funds & patch-over the problem. They can also vote to transfer more of the lenders cash into the lenders' reserve fund at will.

As most p2p directors have significant shareholdings in these companies, there must be a direct conflict between the value of their shares and what they do with the cash being held on behalf of the lenders.

I wonder if a journalist (or MSE?) might research a spreadsheet, asking the big P2P companies

1) what is the composition of the board that administers the lenders' reserve fund?

2) What proportion of the board are independent of the P2P business and are there to act on behalf of the lenders?

3) Are there plans to eventually have the reserve funds held and administered as an independent trust?

As the P2P companies have formed a powerful trade group that votes on how they police themselves. I fear there's little the government is doing to make them do the right thing and separate the lenders' reserve funds from the businesses.

Just like Bank of England has been separated from The Government. The optimum size of the lenders' reserve fund, and how it is spent should be independent of the p2p company.

As p2p savings regrettably still remain outside the government's savings guarantee scheme, transparency like this, over what is done with lenders' cash, becomes even more vital for savers.

from Lending Works 6 Dec 2016

Dear investor,

We wanted to let you know about a recent change we have made to our Lender Platform Terms and Conditions.

From 13 December 2016, we may offer loan agreements in respect of which the interest rate charged to and payable by the borrower is less than the interest rate set out in your corresponding lending offer relevant to the loan. Where this is the case, Lending Works will pay you any interest rate shortfall. We call this an Interest Rate Top-Up. We have added clauses 9.37 – 9.41 into our Lender Platform Terms and Conditions to reflect this.

A copy of our latest Lender Platform Terms and Conditions can be found at: https://www.lendingworks.co.uk/legal-information

Any sums showing in your Lending Works Account as paid, due and payable in relation to loan agreements subject to an Interest Rate Top-Up will always be shown as inclusive of any Interest Rate Top-Up.

If you have any questions about this change, please do not hesitate to call us on 020 7096 8512 or email cs@lendingworks.co.uk. Other than that, you do not have to take any further action in relation to this change.

Thanks, Steve Cullen, Customer Services Manager