Post by decleoro on Feb 10, 2021 23:31:08 GMT
At Lending Works we believe looking after your money is our greatest responsibility. We're writing to let you know about some important changes we're making to the way your investment works, which will help ensure your investment remains stable and resilient for many years to come.
The primary reason for making such changes is to help us fulfil our commitment to you and our overall vision that we will pioneer fair financial services that people love. The timing of our changes is partly driven by the Financial Conduct Authority's new regulatory requirements for peer-to-peer lending platforms, effective from 9th December 2019, and partly by our desire to make the Lending Works Shield more resilient and robust, particularly given the current uncertain political and economic environment. Lending Works is an advocate of the FCA's new regulations and actually campaigned for them to be implemented - we think this is a very positive step for the industry and especially for our customers.
During the first few years after our launch in 2014, we focussed intensively on things like iteratively building our software platform and our financial products, and putting together the highly accomplished team and systems required to build a mass-market regulated financial services business. More recently though, we've been focusing on things like scaling the business and creating greater resilience. Specifically, we want to ensure that our business and our financial products are robust, irrespective of the wider market and economic environment. To set the highest standards with regard to customer experience, we have to be able to maintain that standard over the long-term.
At Lending Works, one of our core values is to be straightforward. With that in mind, we've set out a simple overview of the changes below.
Enhancing the Lending Works Shield
We're making some changes to the way the Shield operates to ensure it is more resilient and robust over the long-term. Investing via Lending Works will continue to be fair, simple, trusted and consistent, and the Shield is integral to these principles. The changes mean that interest rates paid to investors become variable, if required, to account for variations in the performance of the loan portfolio. This will enable the Shield to continue to provide first-loss cover, regardless of any adversity caused by economic or political conditions, such as those that we currently face.
These changes will also result in an adjustment to the interest rates on the existing loan portfolio, with interest rates reducing from an average of 5.2% p.a. to 4.8% p.a. Furthermore, we will not be renewing the insurance policies that the Shield previously took out against some of the causes of loan default. After a thorough review, it was deemed that the insurance was no longer economically beneficial over the long term.
Ensuring consistent returns from investing with Lending Works is hugely important to us. With that in mind, we will be contributing the majority of our future interest margin on the existing loan portfolio to minimise the impact on investor returns. As a result, each of our retail investors will be around 0.4% p.a. better off than they would have been had we not made this contribution.
The Shield is a fundamental part of our award-winning product for retail investors, given the first-loss cover and consistency it provides. This update will make the Shield, and ultimately our investment products, robust and resilient - characteristics we intend to deliver over the long term. Read more about the improved Shield here and the investor and return statistics here.
Further disclosures and information available via our website and investment dashboard
We're publishing a number of policies, frameworks and additional information on our website, in addition to providing more granular information on your portfolio within your dashboard, helping you understand more about your investment.
We've published a new webpage on how we manage risk here. Furthermore, we've revamped our statistics pages to provide more meaningful and insightful information. We will also be publishing quarterly performance updates and annual 'outcomes statements' so you can track the performance of your investment over time.
Lending Works the company and our plans for the future
We feel it's important for our customers to understand what we're working hard to achieve, and why we're passionate about doing so. Lending Works has no greater asset than its talented team, which you can find out more about here. Since we launched Lending Works in January 2014, we've grown significantly and we have plans to continue that growth in a controlled yet ambitious manner for the foreseeable future. Deloitte and The Sunday Times recently ranked us amongst the fastest-growing technology companies in the UK, and we will be investing heavily in our team and product to ensure this growth continues in the future too.
New terms and conditions
The new terms and conditions can be seen here, which come into effect on 1st January 2020.
Given the range of changes we are making, in line with our company values, we will be waiving any fee payable to Lending Works for investors wishing to sell loans between now and the changes going live. Please note that any interest rate shortfall discount, payable to investors purchasing your loans if the loan rate is lower than the current rates, will still apply.
We will not send our usual weekly lender email tomorrow, Friday 29th November. Interest rates for next week will stay at 6.5% for Growth and 5.0% for Flexible; however, your Dashboard and our website will show the reduced rates as, on the 1st January 2020, interest rates on loans funded in December 2019 will be reduced in line with this announcement.
Thank you for being a Lending Works customer
We love our customers, and we want to create a brand and company that you can love back. We appreciate that we have plenty more work to do, but we can assure you that we will relentlessly work towards the achievement of that objective. We want to say thank you for your support and for being our customers over the (almost) six years since we launched, and we look forward to achieving many more milestones with you in the future.
Yours sincerely,
Nicholas, Matthew and Simon
Co-founders and Chairman
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