The Bank of England's Financial Policy Committee discussed concerns over consumer credit defaults in its recently released minutes; credit card, bank loan and car loan borrowing has increased and the Bank is also concerned about prolonged interest free offers and eased underwriting standards; stress testing has revealed potential losses for banks of 18.5 billion British pounds ($23 billion) on their consumer credit loans and 11.8 billion British pounds ($15 billion) on their mortgage loans; as the Bank monitors consumer lending, it is likely new constraints will be required to manage risks in the new economic environment. Source
UK small business lender Funding Circle formed a strategic partnership with the Dutch financial services firm Aegon; Aegon will look to fund about $205 million worth of loans in the first twelve months and then steadily increase that amount for the next three years; the deal helps to ease the gap left by the European Investment Bank who pulled back a $129 million commitment in the wake of the Brexit vote; Funding Circle CEO and Co-Founder Samir Desai explained to AltFi: "This partnership is validation of the attractive risk-adjusted returns that are being generated to investors by lending through Funding Circle. We hope our joint programme with Aegon will develop to deliver increased lending to UK small businesses over the coming years." Source
UK millennial banking app, Loot, has raised $2.5 million from backers that include SpeedInvest and Global Founders Capital; Loot is an app for millennials to monitor spending and transactions; an account is setup using a photo, ID/passport and a UK address. Source
UK online lender Funding Circle has announced it will be slowing its property lending with plans to fully end the product by mid 2018; the firm is primarily focused on SME lending and says the refocused strategy will help it to increase SME lending and shift its resources for international expansion; property loans have previously only been available to UK borrowers and the product has accounted for approximately 5% of the company's revenue. Source
Stuart Law from Assetz Capital discusses different platform approaches to security, risk assessment and lending in an article for FT Adviser; provides details on the pre-approval and post-approval process for loans, noting the importance of these processes for investors given that P2P platforms provide alternative investments with potentially higher risks; also discusses the advantages that a provision fund can offer for investor security. Source
Innovate Finance and the Financial Conduct Authority have published a preview report on the UK Fintech Sandbox with a full report planned for May 2017; the preview report provides insight on the benefits of fintech sandboxes and how they can promote innovation while also helping to facilitate regulation. Source
Cumulative lending for the Association's members is now GBP8.5 billion; the Association's nine platforms originated GBP1.004 billion ($1.29 billion) in the first quarter with originations led by Funding Circle with GBP328.1 million ($421.6 million); business lending originations totaled GBP636.2 million ($817.5 million) and reported an increase of 17% from the previous quarter and 43% from the first quarter of 2016; overall, Zopa leads cumulative originations with GBP2.17 billion ($2.79 billion) and Funding Circle is following at a close second with GBP2.16 billion ($2.78 billion). Source
RateSetter has created a new committee to monitor and report on expected losses providing increased transparency for the firm; the committee will include RateSetter's CEO, CFO and various other directors of consumer and commercial credit risk; the committee will provide quarterly reporting on expected losses for the board of directors and also plans to publicly disclose data on its website; additionally the firm plans to enhance its performance reporting with more details on materialized and expected losses; overall, new initiatives around risk monitoring are an effort to more accurately analyze and manage risk following higher than expected losses from loans in 2014 and 2015. Source
Chancellor Hammond has reported the UK Spring Budget which provides insight for the region on the UK's economy as it separates from the European Union; the Spring Budget included a 270 million British pound ($328 million) investment by Industrial Strategy challenge fund for development of innovative technologies; Crowdfund Insider provides comments on the Spring Budget from a few executives in alternative finance; of note is the Budget's continued provision that prevents investors from diversifying across innovative finance individual savings accounts and a change in the tax on dividend income. Source
P2P property lending has been providing steady returns in the UK, according to a report from rating agency, 4thWay; since 2013, UK P2P property lenders have lent £1.6 billion with returns ranging from 2.25% to 12.7%; lenders in the category have achieved success through thorough underwriting processes with maximum loan to value ratios of 70% to 80% and most loans secured by the property. Source