EASYMONEY has responded to criticism that its platform lacks diversification by claiming that it takes “a very conservative approach to writing loans”, resulting in a smaller volume of loans.
Last month, some of the peer-to-peer lending platform’s investors complained to The Telegraph that their money was being held in just a handful of loans, raising concerns around EasyMoney’s diversification process.
Unlike most other property-backed platforms, EasyMoney does not offer any information about property locations or valuations, and investors are not told how many properties their money has been invested in.
Investors and industry analysts have also expressed concern that within the first week of investing, all of an investor’s money could be held in just one property loan.
While EasyMoney has promised to improve its transparency in the near future, the platform has also defended its processes, pointing towards its conservative approach to loan originations, and Brexit-related caution.
“EasyMoney is committed to increasing our investors’ diversification by adding more loans to the platform,” an EasyMoney spokesperson told Peer2Peer Finance News. “However, we also take a very conservative approach to writing loans, and we will not relax our lending criteria in order to grow our loan book more quickly.
“Growth of the loan book has been slower than anticipated, as Brexit means we have been more cautious in our underwriting. As other platforms have proven, diversification alone does not reduce risk if loans are poorly underwritten.”
EasyMoney also clarified that it operates a gradual diversification system. When investors first invest in the platform, their money is added to the first available loan in order to begin earning interest as soon as possible. The diversification process begins in the first week, and investors are then continually diversified into new loans as they become available.
However, there is no information on the company’s website regarding the number of available loans, or the number of loans which have been made available since inception.
The EasyMoney spokesperson confirmed to Peer2Peer Finance News that the platform has originated fewer than 100 loans since it was established in February 2018.