Wellesley & Co
Lending platform, Wellesley & Co Ltd, has facilitated £494 million of investment (primarily in asset-backed property) since 2013. The company currently issues bonds, awaiting the relaunch of its peer-to-peer lending (P2P) part of the business.
Wellesley & Co is currently redeveloping its P2P product-set having paused this side of the business at the end of May, forecasting a Q3 re-launch. To remain informed, investors can submit their details to the Wellesley website – a Wellesley representative informed that it will be some months until their P2P proposition is re-launched, but investors are being regularly updated.
It’s nearing the end of the third quarter of 2017 and there is no sign of the revamped platform, so we’ve decided to reflect on Wellesley’s decision to pause its P2P operation, providing greater insight and clarity for those concerned.
Why change their P2P offering?
In May of this year, Wellesley co-founder Andrew Turnbull announced that the platform’s P2P lending operation will be paused until Q3 2017 in pursuit of FCA authorisation. In an effort to satisfy customer demand, and also meet the regulator’s requirements, Wellesley & Co announced that technical changes would need to be made. More on these changes and the impact on investors below.
What are the effects?
Here are the key changes that will be implemented upon Wellesley’s P2P relaunch:
- No monthly interest, the fixed target rate of return will be paid upon maturity.
- No provision fund, losses will be passed on to borrowers after security is called upon.
- Switch to novation model, where Wellesley & Co originates loans before novating over to investors.
Other things to consider if you’re an investor in Wellesley’s P2P products pre-May 31st are:
- The servicing of your loans will continue as usual, until contractual maturity.
- You are not required to make any changes to your personal account.
- Funds sitting in your holding account will not be affected, they can be withdrawn or invested in the other Wellesley products available.
- Interest will continue to be earned at the same rate, until the loan reaches maturity.
For more information visit Wellesley & Co’s FAQs section of the website.
Fundamentally, these changes have been made in an effort to fit with the FCA’s demand for standardisation across the industry. Zopa, a giant in the market, was fully authorised earlier this summer. They too have stopped their provision fund; this is a possible indication of the FCA’s position on provision funds.
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Should investors be concerned?
It’s always encouraging to see peer-to-peer lending platforms make changes in aid of transparency and to satisfy regulatory requirements.
From Wellesley’s online information, and having spoken directly with the platform, it appears that the servicing of P2P loans have, and will, continue as planned – the decision to pause P2P will have no material effect on open loans essentially. The changes which will (likely) come into effect towards the end of this year will impact new investments made.
However, for those who’ve been following Wellesley & Co this past year, it’s been a run fraught with incidents. Firstly, a new chief financial was brought in mid-2016 to ensure Wellesley’s late accounts up to December ’15 were finalised. This was a pre-cursor to Wellesley & Co’s attempt at raising equity investment on crowdfunding platform, Seedrs. After May’s P2P announcement, it was reported that Wellesley & Co’s founder had received a £1.7m loan from the company to purchase shares in Wellesley – it was quickly revealed that the equity investment was made to absorb losses which otherwise would have passed on to investors. The loan was secured on the founder, Graham Wellesley’s, personal property.
While media attention certainly raises eyebrows, it’s important to remember that the platform has openly committed to servicing open loans, and has published statements and its loan book to support their move for greater transparency.
Wellesley & Co’s current offerings
At present, Wellesley & Co offers two products. The ‘Wellesley Property Bond’ returns up to 4.2% per annum, with the choice of 2-years or 3-years terms. The loans are made to commercial property developers, where property secures the loan at a loan-to-value (LTV) rate of 65%. The fourth bond issue closes on 28th September.
Wellesley Property Bond Min/Max investment: £1,000, No Max
The second product on offering is the ‘Wellesley Mini-Bond’. This is available to a limited class of persons, namely: certified ‘High Net Worth Investor’; certified ‘Sophisticated Investor’; self-certified ‘Sophisticated Investor’; or certified ‘Restricted Investor’. The Mini-Bond provides investors with the opportunity to invest in the Wellesley business. As stated on the Wellesley & Co website, investors can contribute to the ‘ongoing success by providing additional operating capital for business expansion and to fuel further growth of Wellesley Finance Plc’s property lending business.’
Wellesley Min-Bond Min/Max investment: £100, No Max
Wellesley & Co has seen significant change in the past year – often met with unwanted media attention – but the lender remains committed to servicing open P2P loans and transforming its P2P offering with investor interests and the regulator at the centre of the company’s decision making. If you, an investor in Wellesley, have additional concerns, Wellesley’s customer service is open 8.30am – 5.30pm Monday to Friday. Having spoken with a representative at length, they are quick at responding.
For More Information on the P2P “Big 3”, Read Orca’s Professional Reviews: Funding Circle Review, Zopa Review, Ratesetter Review