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Lendy Sends Shockwaves But No Surprises
From our point of view, it was never a good start for Lendy, formerly called Saving Stream. Since the beginning, it never passed the basic, simple tests cited in principles one and three of 4thWay's 10 P2P Investing Principles.
In short, Lendy hasn't provided enough information about its risks and rewards to be properly assessed by our experts or to be listed in the 4thWay comparison tables, and it does not publish enough information for the public to make their own assessments based on the same.
So it's been an easy one for most 4thWay users to avoid.
However, a lot of other Lendy lenders might be pretty worried right now if they have not been sensibly spreading their money across lots of different P2P lending sites.
So many troubling loans
In a revealing article, The Financial Times (which did well in finding a source for Lendy's loanbook, which is usually restricted to lenders' personal use only) found that almost two-thirds of borrowers failed to repay their loans on time, with their loans falling at least a day late.
The Financial Times' interpretation of the data is not correct. The actual proportion of loans that fall late is lower than that. But it is obvious that there are far too many loans that are worryingly late or in trouble.
Lendy's own public statistics are very limited, but they still show that around a quarter of its outstanding loans are at least 180 days late. That's half a year. Which means there must be many tens of millions of pounds-worth of loans that are extremely late.
It is quite common for the types of loans offered by Lendy – short-term property (bridging) loans and development loans – to fall late. But this is a large amount of very late loans compared to the similar competitors that provide 4thWay with detailed loanbook data.
Why doesn't Lendy talk about bad debts?
It is highly suspicious that, after all these years, and all these late loans, Lendy does not class any loan in its public website statistics as worse than merely “non-performing”. It doesn't go so far as to call any of them bad debts or any similarly stronger expression.
And it hasn't publicly acknowledged any write-offs in its website statistics, or at least explained why it hasn't had to bite the bullet on any of its very late loans yet.
The Financial Times article states that an £8 million loan for a Marylebone development was not even considered “non-performing” last week, even though Lendy issued a formal demand for repayment of the late loan over a year ago.
And an £11 million development loan is only now going to be classed as non-performing, even though the borrower went bust in June.
Particularly with this kind of lending, what lenders need to see is rapid action against late and bad debts. That is one of the key indicators of how well a peer-to-peer lending site will recover bad debts. From the limited information we can see publicly, it looks like Lendy is neither quick to take serious action nor quick to reveal the extent of problems that loans are suffering.
It's not the regulator's job to fix Lendy's problems
The Financial Times article goes on to state that Lendy has asked the Financial Conduct Authority for help with a “vexatious” £10 million claim that the Marylebone borrower is bringing against Lendy and the lenders who lent to it through Lendy.
It could well be that the claim is vexatious. But it seems absurd that Lendy is asking the regulator for support and smacks of desperation. It is up to Lendy to manage the risks – which is the whole point of money lending – and that includes taking on borrowers and loans where it can comfortably handle the risks if the loan goes wrong.
If it had been more open with lenders and analysts, and quicker to publicly acknowledge bad debts, perhaps I could have granted it a bit of goodwill and sympathy. It has not earned it.
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