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New peer-to-peer lender set to revolutionise the UK market
Lending Works launches an industry-first product that provides borrower default protection
Lending Works’ online platform allows people to lend their savings for a competitive return to creditworthy people requiring finance. Personal loan borrowers are prudently selected by the company’s team of highly experienced underwriters using advanced underwriting techniques and electronic credit scoring. Loan terms and lending periods are both one to five years.
Unlike all other peer-to-peers lenders currently operating in the UK, Lending Works’ lenders will be protected by the ‘Lending Works Shield’, which includes a reserve fund, borrower default insurance and fraud and cyber crime insurance. For the very first time, people who wish to lend via the peer-to-peer model can do so with Lending Works in the confidence that their money is protected against borrower defaults and fraud.
The Shield forms the final layer of security in a threefold protection model devised by Lending Works, for whom protecting customers’ money is their highest priority. The first and second principles which shield lenders’ funds comprise:
- Meticulous underwriting: an expert team of underwriters, accountants and former bankers ensure the best underwriting processes are used to approve only the most eligible borrowers;
- Ring-fenced Trust: all lenders’ money is held within a trust that is administered by a not-for-profit company and is ring-fenced from the day-to-day operations of Lending Works.
Lending Works is also pleased to announce that it has completed a successful pre-launch fundraising round raising £3.5 million from venture capital and angel investors.
Lending Works’ innovative structure provides favourable conditions to its lenders and borrowers which are unlikely to be achieved using traditional financial organisations. Rates are highly competitive for both lenders and borrowers and the company is targeting a net return to lenders of approximately 5.1% AER when their money is lent for five years.
Currently peer-to-peer lenders are capturing only 1% of the UK personal loan market, which is estimated to be worth £25 billion. However, the growth rate of the industry is accelerating and the Open Data Institute forecast the digital finance sector to reach £1 billion by 2016. Indeed Andy Haldane, executive director of financial stability at the Bank of England has suggested “innovations in peer-to-peer lending…could make some bank functions surplus to requirement”
Nicholas Harding, founder and Chief Executive, commented:
“In Lending Works we have launched a highly competitive peer-to-peer lender with security, simplicity and transparency at its heart. With our unique threefold protection we are ideally placed to offer lenders and borrowers alike a genuine, fair and trusted alternative to other traditional forms of finance, providing favourable terms and complete peace of mind.
“Accessing finance and making the most of your investments need not be time-consuming or difficult. We are excited to be launching a product which is wholly focused on moving peer-to-peer lending on from a relatively niche product to a mainstream sector of financial services.”
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