Post by Monetus on Mar 29, 2019 16:52:32 GMT
Dear XXX
I want to thank you for your continued support during the first quarter of 2019. It hasn’t been an easy start to the year, but we have been working hard on the recoveries process. The individual loan recoveries have progressed positively, with some £16m repaid to lenders since December.
In addition, projected recoveries should be significant during the next three to four months. Some of these will include interest as well as capital, while others will be interim repayments as we seek to recover further monies through legal claims.
Lendy, like much of the peer to peer sector, has experienced a significant rise in borrower defaults as challenging market conditions continue to affect us all. The next quarter will not be without these issues, but I want to assure you that the business is in a more robust position than it has been, and we continue to focus on achieving recoveries on your outstanding loans.
It has been well documented that the peer to peer sector, particularly in the UK, has seen a rise in loan defaults. Lendy is not alone in facing a challenging period of recoveries as borrowers find themselves under increasing pressure which has led to their failure to repay on time and in full. The slowing UK economy and wider Brexit uncertainty has highlighted just how difficult it is for SMEs to secure funding or refinancing of any sort.
However, it cannot be highlighted enough that using a platform such as Lendy as part of an investment portfolio is a high risk option that retail consumers must understand before committing to lending. Unlike personal bank accounts, the peer to peer sector is not covered by the Financial Services Compensation Scheme, meaning any money lent could be lost entirely.
There are individual loans that we are pursuing claims under valuers’ and in some cases solicitors’ professional indemnity insurance. While there isn’t a guarantee of a full capital repayment, we are expecting some recovery, but this process can take 12 or 24 months.
We have had a number of questions regarding the use of Lendy’s Provision Fund as a means of paying out on loans, where the recovery is less than the full capital figure. In circumstances where we have explored and exhausted all alternative recovery options, an application can made to Lendy’s Provision Fund, as was successfully done for DFL 035 in January 2019.
The Provision Fund is a discretionary fund and will only approve a pay out in exceptional circumstances. It is at the sole discretion of the Provision Fund committee whether or not it covers some or all capital losses, if it has the capacity to do so.
In order to improve our working capital to fund ongoing recoveries towards the end of last year, the business raised further finance and as part of this, there was a charge for £1m over the Provision Fund. We are in the process of restructuring the banking facilities and the debenture over the Provision Fund is scheduled to be removed over the next four to eight weeks. Moving forwards, we can confirm that the Provision Fund will be further ring fenced and will not be subject to any charge or encumbrance.
When I wrote to you in early December, I highlighted a number of areas the business was addressing and outlined below is a short update
Governance – We announced some changes to the board in December and since then, there have been further changes to senior personnel within Lendy. As a large proportion of Lendy’s loan book is in the North of England, we had been looking to set up an office in the Manchester area to oversee and manage the recoveries process. As the recoveries moved forward, this move has become less of a priority and we felt that expenditure on an additional office was not justified.
Most of that team was based in the North West and the logistics of travel were increasingly time consuming. Gary, David and Paul each made valuable contributions to the business during a period of transition and have left on good terms.
We have since appointed an Executive Leadership Team all of whom have the depth of experience and specialist industry expertise that we have been seeking and we are now well placed to drive the business forward.
Financial control – This has been an underlying theme to all our activities and continues to be so. We have put in place measures to ensure that our policies and procedures will allow us to deliver the desired outcomes.
Liquidity – We have been working hard on some new initiatives to improve the liquidity of the business and these have proved beneficial. Going forward we are looking to further increase the financial strength of the business and build on the upward momentum we have seen recently.
Recoveries – The full recoveries team is now in place and we are working alongside industry leading specialists to take the process forward. There are payments due in the short term, a proportion of which will be interim payouts, others full capital sums, interest and bonus. We would reiterate that Lendy is neither a bank or an investment fund, so it does not hold money on lenders’ behalf, it acts as an agent and while higher returns can be projected, the associated risk profile must also be taken into account.
Compliance – In view of the current challenging position and in line with our responsibilities, we are appraising the FCA of all relevant matters.
In addition to the above, and following your feedback, we continue to establish better ways to communicate with you, particularly when there is meaningful activity on the loans you are involved in. We have developed lender portals for specific loans, where the recovery process is sensitive, and these will be introduced very soon. This will enable us to share with you a greater level of transparency on these loans, without waiving legal privilege and each lender will have password protected access.
If you have any points you wish to raise, please continue to email them to ask@lendy.co.uk which was set up for your feedback. We will try to address them, but not always by way of an individual response.
Yours sincerely,
Liam Brooke
Chief Executive Officer
Lendy Ltd
I want to thank you for your continued support during the first quarter of 2019. It hasn’t been an easy start to the year, but we have been working hard on the recoveries process. The individual loan recoveries have progressed positively, with some £16m repaid to lenders since December.
In addition, projected recoveries should be significant during the next three to four months. Some of these will include interest as well as capital, while others will be interim repayments as we seek to recover further monies through legal claims.
Lendy, like much of the peer to peer sector, has experienced a significant rise in borrower defaults as challenging market conditions continue to affect us all. The next quarter will not be without these issues, but I want to assure you that the business is in a more robust position than it has been, and we continue to focus on achieving recoveries on your outstanding loans.
It has been well documented that the peer to peer sector, particularly in the UK, has seen a rise in loan defaults. Lendy is not alone in facing a challenging period of recoveries as borrowers find themselves under increasing pressure which has led to their failure to repay on time and in full. The slowing UK economy and wider Brexit uncertainty has highlighted just how difficult it is for SMEs to secure funding or refinancing of any sort.
However, it cannot be highlighted enough that using a platform such as Lendy as part of an investment portfolio is a high risk option that retail consumers must understand before committing to lending. Unlike personal bank accounts, the peer to peer sector is not covered by the Financial Services Compensation Scheme, meaning any money lent could be lost entirely.
There are individual loans that we are pursuing claims under valuers’ and in some cases solicitors’ professional indemnity insurance. While there isn’t a guarantee of a full capital repayment, we are expecting some recovery, but this process can take 12 or 24 months.
We have had a number of questions regarding the use of Lendy’s Provision Fund as a means of paying out on loans, where the recovery is less than the full capital figure. In circumstances where we have explored and exhausted all alternative recovery options, an application can made to Lendy’s Provision Fund, as was successfully done for DFL 035 in January 2019.
The Provision Fund is a discretionary fund and will only approve a pay out in exceptional circumstances. It is at the sole discretion of the Provision Fund committee whether or not it covers some or all capital losses, if it has the capacity to do so.
In order to improve our working capital to fund ongoing recoveries towards the end of last year, the business raised further finance and as part of this, there was a charge for £1m over the Provision Fund. We are in the process of restructuring the banking facilities and the debenture over the Provision Fund is scheduled to be removed over the next four to eight weeks. Moving forwards, we can confirm that the Provision Fund will be further ring fenced and will not be subject to any charge or encumbrance.
When I wrote to you in early December, I highlighted a number of areas the business was addressing and outlined below is a short update
Governance – We announced some changes to the board in December and since then, there have been further changes to senior personnel within Lendy. As a large proportion of Lendy’s loan book is in the North of England, we had been looking to set up an office in the Manchester area to oversee and manage the recoveries process. As the recoveries moved forward, this move has become less of a priority and we felt that expenditure on an additional office was not justified.
Most of that team was based in the North West and the logistics of travel were increasingly time consuming. Gary, David and Paul each made valuable contributions to the business during a period of transition and have left on good terms.
We have since appointed an Executive Leadership Team all of whom have the depth of experience and specialist industry expertise that we have been seeking and we are now well placed to drive the business forward.
Financial control – This has been an underlying theme to all our activities and continues to be so. We have put in place measures to ensure that our policies and procedures will allow us to deliver the desired outcomes.
Liquidity – We have been working hard on some new initiatives to improve the liquidity of the business and these have proved beneficial. Going forward we are looking to further increase the financial strength of the business and build on the upward momentum we have seen recently.
Recoveries – The full recoveries team is now in place and we are working alongside industry leading specialists to take the process forward. There are payments due in the short term, a proportion of which will be interim payouts, others full capital sums, interest and bonus. We would reiterate that Lendy is neither a bank or an investment fund, so it does not hold money on lenders’ behalf, it acts as an agent and while higher returns can be projected, the associated risk profile must also be taken into account.
Compliance – In view of the current challenging position and in line with our responsibilities, we are appraising the FCA of all relevant matters.
In addition to the above, and following your feedback, we continue to establish better ways to communicate with you, particularly when there is meaningful activity on the loans you are involved in. We have developed lender portals for specific loans, where the recovery process is sensitive, and these will be introduced very soon. This will enable us to share with you a greater level of transparency on these loans, without waiving legal privilege and each lender will have password protected access.
If you have any points you wish to raise, please continue to email them to ask@lendy.co.uk which was set up for your feedback. We will try to address them, but not always by way of an individual response.
Yours sincerely,
Liam Brooke
Chief Executive Officer
Lendy Ltd
