ONLY a small number of investors have pulled money out of Lending Works since it reduced interest rates and put more money into its Shield contingency fund ahead of the new Financial Conduct Authority (FCA) regulations last year, the platform has revealed.
Nick Harding (pictured), chief executive of the peer-to-peer consumer lender, said only a “low-single-digit percentage” of users have since reduced their investment.
From January, its terms and conditions have allowed it to alter interest rates if the loans aren’t performing as expected and it will pass on more of its interest margin to its Shield product.
“Our product update has been well received by retail investors and the feedback we have received, on the whole, has been positive,” Harding told Peer2Peer Finance News.
“The product release is now complete and we are in the new normal with regard this mechanism and how the Shield works.
“A low-single-digit percentage of customers reduced their investment with Lending Works and many are now increasing their investment. This product update went exactly to plan and we are pleased with the results.”
Harding said the implementation of categorisation and appropriateness tests under the new FCA rules has been successful, adding that approximately three quarters of new retail investors complete the process of becoming a fully-fledged investor.
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“For Lending Works and for the P2P lending industry, 2019 was a very important year and one that saw our industry and our platform progress significantly,” Harding added.
“The industry saw the introduction of the FCA regulations as well as several firms that hadn’t managed to gain credible traction withdraw.
“Together, these events have left the industry stronger, more robust and more resilient. As the new regulations take effect, we will see the firms that continue participating being well governed and having the necessary controls and risk management to thrive in the future.”