The risks and
how we work
to minimise them.

Risk Management

Whilst it’s important that investors understand the nature of the risks associated with Peer-to-Peer lending, it’s equally important that they fully appreciate the considerable steps we take at Wellesley to minimise those risks and the impact they have on our customers.

A borrower may default

Peer-to-Peer lending involves matching investors who want a better return on their money with borrowers who require a loan at a fair interest rate. As with all Peer-to-Peer lenders, the biggest risk posed to investors is if one of their borrowers does not repay their loan. This means that lenders’ capital is at risk.

How we minimise risk

Unlike traditional Peer-to-Peer lending companies, we only participate in asset-backed lending, which means that the total value of the loan is secured against an asset. If the borrower does not repay their loan, we can sell the asset to seek to recover any shortfall. We only lend to borrowers with high quality assets that we believe could be sold readily. In addition, we place our own funds into every Peer-to-Peer loan we make, which means that the first loss is absorbed by the portion of money we have in the loan.

We may become insolvent

If Wellesley & Co were to stop trading for any reason, it would present some risk to you in that we would no longer be able to manage borrower repayments to your account.

How we minimise risk

We have taken a number of precautionary steps to ensure that, in the unlikely event of our insolvency, you would have protection.

  • All customer money that is not on loan is held in a segregated client money trust account with either Barclays Bank or Lloyds Bank, London.
  • The security provided by a borrower in favour of the loan is held by an independent Security Trustee.
  • We have made arrangements with our Security Trustee to take over the administration of our customer loans in the case of Wellesley & Co no longer trading. The trustee will manage the day-to-day operations of Wellesley & Co to ensure that the platform can continue to be offered to existing customers and that all borrower repayments of interest and capital are credited to your account as normal. The directors of Wellesley & Co have committed to assist the Security Trustee, and the costs of operating would be covered by the interest rate margin in each loan.

The property market may fall

For loans that are secured against property, the borrower’s ability to repay the loan would likely be affected if there were a dramatic downturn in the UK property market.

How we minimise risk

If such a situation were to occur, the management of Wellesley & Co would consider any claims for repayment using the company’s own capital.

Interest rates may rise

As with any fixed-term loan or bank term deposit, there is a risk that interest rates could increase before the end of the committed term, which would mean that you would not be able to move your capital into a higher interest-bearing loan until its maturity.

How we minimise risk

Whilst this is a consideration that you should make before committing your funds, it does not represent a risk to your interest payments or to the return of your capital.

Investing in Peer-to-Peer lending involves risk to your capital. Although Wellesley & Co is regulated by the Financial Conduct Authority (FCA) under interim permissions, if you suffer a loss, you are not entitled to compensation from the Financial Services Compensation Scheme.

Investment through Wellesley & Co Limited involves lending to individuals or companies and therefore your capital is at risk and interest payments are not guaranteed if the borrower defaults. It is important to remember that historic loan default rates are not necessarily indicative of future default rates. Wellesley & Co Limited is authorised and regulated by the Financial Conduct Authority (FCA) (Registration Number 655503). Wellesley & Co Limited is not covered by the Financial Services Compensation Scheme. Wellesley & Co Limited (No. 07981279) is registered in England and has its registered office at St Albans House, 57/59 Haymarket, London, SW1Y 4QX.