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Platform Analysis: Lending Works

Key Information

Founded:
November 2012
Company No:
8302549
FCA Permission:
Fully Authorised
FCA Number:
723151

Account Details

Account Types:
General Investment Account (GIA) and Innovative Finance ISA (IFISA)
IFISA Status:
Available
Investment Structure/Bid Type:
Autobid
Loan Type:
Consumer

Product Name

3 Year

This product automatically splits an investor's capital across multiple consumer loans of upto 3 years in term. They can auto re-lend their repayments to new borrowers on the platform or take repayments as income.

Product Details

Term:
3 years
Min Investment:
£10
Max Investment:
No Max
Advertised Rate:
4.5%

Product Name

5 Year

This product automatically splits an investor's capital across multiple consumer loans of upto 5 years in term. They can auto re-lend their repayments to new borrowers on the platform or take repayments as income.

Product Details

Term:
5 years
Min Investment:
£10
Max Investment:
No Max
Advertised Rate:
6.0%

Actual Net Returns v Estimated

Actual Default v Estimated Bad Debt v Actual Bad Debt

Amount Lent & AUM

Investor Type

Loan Purpose

WEIGHTED BORROWER RATE

Year Min Borrower Rate Average Borrower Rate Max Borrower Rate
20143.1%4.49%6%
20153.5%5.71%17.4%
20163.4%5.41%14.9%
20173.3%4.69%18.1%
20184%6.54%32.3%

WEIGHTED LOAN AMOUNT

Year Min Loan Amount Average Loan Amount Max Loan Amount
2014£1,063.33£4,285.31£27,204.25
2015£1,052.14£6,310.13£29,562.86
2016£265.54£5,461.18£28,250.00
2017£267.21£6,247.42£29,145.00
2018£513.45£6,379.29£29,805.00

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Overview

Lending Works is a peer to peer lending platform that connects investors with UK consumers seeking personal loans. Investors automatically diversify their capital across multiple borrowers when they lend through the platform, they cannot manually select loans.

Risk and Security

The principal risk is a large number of borrowers default. The Lending Works ‘Shield’ protects investors from missed repayments through a combination of diversification, insurance and a provision fund. The maximum exposure a lender will have to a single borrower is 5%, ensuring healthy diversification across loans. The provision fund is maintained at a sufficient level to cover expected arrears and defaults. The other tier of protection in the Shield comes in the form of insurance, which is backed by three A and B-rated UK insurers.

Recovery Process

If a borrower is late in making a repayment, the Lending Works Shield will cover the payment, while the recovery process commences. Lending Works will make initial contact with the borrower and if the borrower still fails to pay, a third party debt collector will take steps to recover the debt.

Withdrawing Funds

To withdraw funds early, investors must sell their loan parts to other investors on the Lending Works secondary market. Lending Works charges 0.6% or £20 (whichever is greater) to sell any loan commitments on the secondary market. Additional charges may apply if there’s an ‘interest rate shortfall’ between current rate on sale and the rate expected by the substitute investor.

Platform Failure

In the event of insolvency, Lending Works has an arrangement with a back-up services provider who would step in to manage the remaining loan agreements to maturity and ensure that all loan repayments continue to be made to investors as planned. Any funds sitting in cash are held in a segregated client account and can be transferred to the investor at any point.