From collaboration with traditional players to partnering with technology and apps, the Peer-to-Peer Sector has evolved at an exceptional pace over the past 12 months. Business lending through the sector is expected to reach £12.3bn by 2020. That’s a tenfold growth from the £1.2bn loaned last year.
Financial, and non-financial, services
The evolution and growth of the Peer-to-Peer sector has been driven by a number of factors. We have seen relationships form between lending platforms and mainstream institutions, where referral arrangements have connected borrowers rejected by banks to alternative lenders. There has also been co-operation with non-financial services, like online retailers and mobile phone networks.
The sector is congratulated for merging and collaborating with others and this innovation has been encouraged by the Government. While this has led to greater choice and competition, consumers are now more than ever looking for professional financial services to which they can entrust their funds. It is important for the Peer-to-Peer sector to build this much-needed trust that has been lost from the mainstream financial services sector. Peer-to-Peer lending platforms can gain, retain and maintain relationships through continued upfront transparency.
Building trust
Ensuring that platforms are clear about their propositions and offerings to customers is essential for the continued growth of the P2P sector. It is key for platforms to be up front about how they will use clients’ funds as they see investors’ capital at risk and neither interest payments nor capital are guaranteed if a borrower fails to repay a loan.
Transparency is the motto for the Monetary Policy Committee and greater openness is the hallmark of the modern central bank. The BoE renewed its transparency methods and was given operational independence by the Government in 1997. However, after the global financial crisis, the Bank’s policies were scrutinised. This resulted in the bank detailing in its 2014 Strategic Plan, where it reaffirmed its commitment to openness and accountability, and expressed its aspiration to enhance its transparency further. A simple outcome of this was the Bank confirming its long-standing practice of recording live discussions of its monthly MPC meetings. The latest Minutes are due this week following this month’s announcement of the Bank Rate.
Keep it simple
At Wellesley & Co, the offer is simple but different to the other platforms. We lend only to borrowers to whom we have lent to before. We also only lend to those who provide an asset on which to secure the loan. By sticking to bricks and mortar, our model is easy to understand and our lenders can see exactly how their funds are protected. On top of this, we make sure our customers’ funds are regularly re-matched to our entire loan portfolio, so their investments are fully diversified. With us, you could see your investment grow at a rate of 6.32% per annum.
To ensure that all of our investors understand our platform and the way in which we operate, we detail our business model and explain how it works upon our website. We support each potential and current investor with our Customer Care Team. Although the Wellesley Customer Care Team is in place to assist with elements of Wellesley investments, it is important to note that they are not advisors. If you would like professional financial advice, we would ask you to seek independent financial advice prior to investing with us.
To contact our London based Customer Care Team, please call 0800 888 6001 or email [email protected] .