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Lending Works hits £20 million in loans on its second birthday and expects to more than double in size in 2016

  • January 2016 marks Lending Works’ second birthday
  • Lending Works’ platform has written nearly £20 million in loans to date, four times the £5 million lent in its first year of operation
  • Forecast to provide over £50 million in loans in 2016 due to arrival of Innovative Finance ISA, in addition to agreements of new partnerships and new sources of loans such as point-of-sale financing

Lending Works, the first peer-to-peer lender to have insurance against borrower default risks such as accident or loss of employment, celebrates its second birthday this week following a hugely successful 2015 in which it facilitated nearly £15 million in loans – a near threefold increase on the £5million written in the lending platform’s first year.

The company has demonstrated consistent growth each quarter, and, having lent out £5 million in the first half of 2015, the numbers have continued to swell with that figure nearly doubling in the latter half of the year. Among this overall total is over £14 million currently on loan, spread across more than 3,000 active loans.

Putting the customer first

Around £150,000 is lent every day through the platform, and this figure is expected to rise to £250,000 by December 2016. Lending Works secured long-term agreements with lending giant P2P Global Investments in 2015 for a steady supply of institutional capital. However, with 1,200 lenders currently lending through the platform, consumers still make up nearly three quarters of total funds currently on loan.

Lending Works’ exceptional level of client service remains at the heart of the business’ strategy. In recognition of this, the company was ranked ‘Highly Commended’ in the Most Trusted Personal Loan Provider category at the prestigious 2015 Moneywise Customer Service Awards, seeing off many high-street financial services behemoths in the process.

Nick Harding, founding CEO of Lending Works, commented:

“It is immensely rewarding to reflect on the tremendous strides we’ve made as a company in such a short period. To go from start-up to the UK’s #3 P2P lender, lending over £150,000 a day and approaching £20 million in loans exceeds even our wildest expectations when we launched.

“We’ve come a long way from the late nights in that tiny office in Farringdon, where it all started. To accommodate our ever-growing team, we upgraded to our new offices in August.

“One of our big motivations was to make the world of financial services a better place by delivering an innovative service that genuinely puts the customer first. In two years this hasn’t wavered, and we’ll keep investing in both our staff and our products to ensure that we continue to raise the bar in terms of service, quality and security.”

Regulation and IFISA

The next 12 months promise to be hugely significant for Lending Works, having met the deadline for application for full FCA authorisation which was a requirement for all P2P lenders to achieve by 31 October 2015. Such regulation has been embraced by the industry as a whole, with it being widely accepted that investor confidence will be further boosted from the regulator giving its seal of approval only to those platforms which are fit for purpose.

In April 2016, the launch of the new Innovative Finance ISA (IFISA), for which P2P loans will be eligible, has been hailed as a major breakthrough for the industry. The opportunity for consumer lenders to benefit from tax-free returns on their loans has experts predicting that the industry could swell to £50 billion within a couple of years, and Harding anticipates that this will contribute to exponential growth for Lending Works.

He explained: “As a relatively new industry, we’ve always been strong advocates of regulation. With our application for full permissions having long been submitted, we embrace the prospect of being held to account to the highest possible standards set out by the FCA and welcome any measures which enhance our reputation and that of our industry.

“But it is the arrival of IFISA which excites us most. The news at the Summer Budget that we would be separated from the existing Stocks & Shares wrapper was hugely significant. It’s something we had lobbied for, and while we’re thrilled to offer our lenders the considerable tax benefits of the new IFISA, we are just as pleased that we will now be in a position to clearly communicate the risks and rewards of holding P2P loans within ISAs to them.

“We believe we have got to where we are by putting the customer first, and that will never change, regardless of how quickly we grow. We’re an ambitious platform, and IFISA, along with numerous exciting partnerships and initiatives – such as our recent agreement with Pay4Later – which we have in the pipeline, mean that we’re expecting to write more than £50 million in loans over the next year, taking our total to £70m.”