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Lending Works Receives Full FCA Authorisation

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By on 13 October, 2016 | Read more by this author

Full authorisation from the financial regulator paves the way for Lending Works' IFISA – a tax-free P2P lending account – in just a few weeks. It'll be the first truly established P2P lending provider to get authorised and to get its IFISA released. Lending Works has a 5/5 PLUS Ratings from 4thWay, meaning by our strict assessments, using international banking standards, the risk and return at this P2P lending company currently looks excellent. More on our ratings here (opens new window).

Lending Works* does over £2 million in loans per month between lenders and borrowers around the UK and, as at the end of September 2016, it had lent over £35 million.

It's great news. We think that says it all really, but here is  our quick expert review of Lending Works (these reviews are currently available in our comparison tables) as well as more details from Lending Works' own mouth:

4thWay's Quick Expert Review: low bad debts, a reserve fund and insured loan repayments

The word “strong” doesn’t even begin to describe the defences this hidden gem has built against losses. It is more selective of its borrowers than any other major personal loans P2P lending company, it has a large reserve fund to cover expected losses, and it has a unique insurance to pay you if a borrower is unable to pay due to accident, sickness or unemployment.

Lending Works has been around since the beginning of 2014 and has completed tens of millions of personal loans. We have no up-to-date management accounts and we assume it is still loss-making, but it appears that recently investors paid around £20 million for less than 20% of the business. It’s extremely transparent, enabling us to analyse each individual loan’s performance using risk modelling and investing techniques.

Lending Works has a lot of underwriting experience in its key team as well as credit-risk experience with personal loans. We believe its interest rates are high enough, with a large margin of safety, to protect lenders from disaster during a severe recession. To sensibly spread your money across lots of borrowers, you will need to lend money over many months.

Lending Works' own words

  • UK’s third-largest consumer peer-to-peer lending platform receives FCA stamp of approval
  • The firm applied for full authorisation in October 2015 and has undergone a stringent review process since
  • FCA authorisation is a validation of Lending Works’ compliance, policies, systems and processes and culture of treating customers fairly

Green light from FCA also paves way for launch of new Innovative Finance ISA

Lending Works confirms this will take place within the next few weeks.

Lending Works, the first peer-to-peer lending platform to have insurance protecting lenders against certain borrower default risks, today announces that it has officially become fully authorised by the Financial Conduct Authority (FCA).

As with all platforms in existence prior to April 2014 which held consumer credit licenses under the Office of Fair Trading, Lending Works had until now been operating under interim permission from the FCA, having submitted its application for full authorisation in October 2015. The announcement therefore brings to an end a review process lasting just under a year, during which all areas of the business have undergone stringent evaluation and scrutiny.

Nick Harding, founding CEO of Lending Works, commented: “To receive FCA full authorisation marks a momentous day for Lending Works. This achievement is the culmination of what has been an intensive journey for us over the past year and vindicates all that we do and stand for as one of the UK’s leading P2P platforms.

“Fair and accessible financial services that uphold the highest standards in both service and governance is a guiding principle of our business. Therefore, we have always supported greater regulation in this sector and welcomed the FCA’s review. The authorisation process is a positive move that will give better protection to consumers, ensure greater transparency and accountability in our sector and will ultimately help grow the profile of peer-to-peer lending in the UK as a genuine, strong and competitive alternative to mainstream, traditional lenders.”

Looking ahead to launch of the Innovative Finance ISA

Since ex-chancellor Chancellor George Osborne announced the launch of the new Innovative Finance ISA (IFISA) – for which peer-to-peer loans would be eligible – at last year’s Summer Budget, much hype had surrounded the prospect of investors being able to benefit from tax-free income from peer-to-peer loans. However, in December 2015 draft legislation confirmed that only platforms with full authorisation from the FCA would be able to obtain ISA manager status from HM Revenue & Customs, thus meaning those operating under interim permission would not be able to offer the new tax-free wrapper when it launched on 6 April 2016.

Yet having now received the green light from the FCA, Harding confirmed that the Lending Works ISA will launch within the next few weeks; with confirmation of the official launch date expected over the next fortnight once HMRC ISA Manager approval is obtained.

Harding added: “With full authorisation in hand, the next step for us is to launch our new ISA – something we have spent much of the past few months preparing for. Given the great benefits this new tax-free wrapper will bring, the level of enthusiasm among our lenders, and indeed consumers within the wider sector, for the new IFISA has been substantial. We very much look forward to delivering this new product imminently.”

Visit Lending Works* or learn a lot more about it in our comparison tables.

*Commission and impartial research: our service is free to you. 4thWay shows dozens of P2P lending accounts in our accurate comparison tables and we add new ones as they make it through our listing process. We receive compensation from Lending Works and other P2P lending companies not mentioned above when you click through from our website and open accounts with them. We vigorously ensure that this doesn't affect our editorial independence. Read How we earn money fairly with your help.

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Wellesley’s P2P lending rates appear higher on its own website than on 4thWay®.

This is because we calculate Wellesley’s interest rates the same way most other P2P lending websites do. We do this so that you can compare the rates more easily and so that they show a more accurate picture of what you’ll earn.

Important information before you visit Wellesley & Co.

Wellesley & Co. is primarily a P2P lending website.

But, when you visit the Wellesley website, you’ll see that it also offers “bonds”. Unlike its P2P lending service, its bonds don’t allow you to lend directly to 100+ borrowers.

Instead, you lend to Wellesley and it lends to other borrowers.

We have not risk-rated either of those bonds, but we expect that their structure makes them more risky, particularly because you’re lending to just one borrower.

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Why are Wellesley’s interest rates different?

Wellesley’s P2P lending rates appear higher on its own website than on 4thWay®.

This is because we calculate Wellesley’s interest rates the same way most other P2P lending websites do. We do this so that you can compare the rates more easily and so that they show a more accurate picture of what you’ll earn.

Important information before you visit Wellesley & Co.

Wellesley & Co. is primarily a P2P lending website.

But, when you visit the Wellesley website, you’ll see that it also offers two “bonds”, one of which is available as an ISA.

Unlike its P2P lending service, neither of these bonds allows you to lend directly to 100+ borrowers.

Instead, you lend to Wellesley and it lends to other borrowers.

We have not risk-rated either of those bonds, but we expect that their structure makes them more risky, particularly because you’re lending to just one borrower.

Got it

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Why are Wellesley’s interest rates different?

Wellesley’s P2P lending rates appear higher on its own website than on 4thWay®.

This is because we calculate Wellesley’s interest rates the same way most other P2P lending websites do. We do this so that you can compare the rates more easily and so that they show a more accurate picture of what you’ll earn.

Important information before you visit Wellesley & Co.

Wellesley & Co. is primarily a P2P lending website.

But, when you visit the Wellesley website, you’ll see that it also offers two “bonds”, one of which is available as an ISA.

Unlike its P2P lending service, neither of these bonds allows you to lend directly to 100+ borrowers.

Instead, you lend to Wellesley and it lends to other borrowers.

We have not risk-rated either of those bonds, but we expect that their structure makes them more risky, particularly because you’re lending to just one borrower.

Got it

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Why are Orchard’s interest rates different?

Orchard’s lending rates appear higher on its own website than on 4thWay®.

This is because we calculate Orchard’s interest rates the same way most other P2P lending websites do. We do this so that you can compare the rates more easily and so that they show a more accurate picture of what you’ll earn.

Got it

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Why are Wellesley’s interest rates different?

Wellesley’s P2P lending rates appear higher on its own website than on 4thWay®.

This is because we calculate Wellesley’s interest rates the same way most other P2P lending websites do. We do this so that you can compare the rates more easily and so that they show a more accurate picture of what you’ll earn.

Important information before you visit Wellesley & Co.

Wellesley & Co. is primarily a P2P lending website.

But, when you visit the Wellesley website, you’ll see that it also offers “bonds”. Unlike its P2P lending service, its bonds don’t allow you to lend directly to 100+ borrowers.

Instead, you lend to Wellesley and it lends to other borrowers.

We have not risk-rated either of those bonds, but we expect that their structure makes them more risky, particularly because you’re lending to just one borrower.

Got it

×
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