Simon Betty, Wellesley’s head of credit, explains why the personal touch is such an important part of the platform’s credit process
IN THE SEVEN YEARS since Wellesley was founded, the property lender has gone through many changes. But one thing has always remained the same – a strict commitment to follow the best possible credit practices. “We are always striving to improve our credit function,” says Andrew Turnbull, director and co-founder of Wellesley.
“Every time we’ve upgraded our credit function, we’ve seen the benefit of it.” One of these upgrades involved the hiring of Simon Betty in 2018 as head of credit. Before any loan is approved for the Wellesley platform, Betty will have reviewed it several times. But he insists that “credit in Wellesley Finance is not just me in a dark room”.
“What happens is essentially a member of our lending team will have a proposal,” he explains. “They will come to me right at the start and ask what I think. We have a quick two minutes and they go away and get more information. They come back with a lot more information which they will use to prepare a very brief paper which then goes to our pre-investment committee. “We then discuss if the proposal has merits. If it’s a no, then the lender moves on. Alternatively, we might say ‘OK, it’s got legs, lets address these issues’.
“As head of credit, I will then go to the site with the lender and interrogate the developer about the project and their experience. This gives me a good idea of whether the developer has the appropriate level of experience and knowledge to complete the project, and what issues may affect its deliverability.” If he is happy with the fundamentals, Betty then considers issues such as whether the costs in completing the development are broadly appropriate, the appropriateness of the procurement strategy and planning consent. And then comes the enhanced due diligence.
“At the moment contractor risk is a real issue so I expect almost as much due diligence undertaken on the contractors as the person or company we’re lending to,” says Betty. Next, the proposal and due diligence goes in front of a business acceptance committee, where all the details of the loan are again discussed in detail. This meeting will end in one of three ways: the loan is declined; an unconditional loan will be offered; or the loan will be approved subject to some conditions.
And the credit process doesn’t end once the loan has been made. Wellesley will appoint a project monitoring surveyor who visits the site and provides the platform with monthly reports. “The monitoring of the loans as they start to draw is as big an issue as the investigations and due diligence we undertake in the first place,” says Betty.
He stresses that this entire process is driven by expert in house analysis and reliance on experienced professionals, not algorithms. This commitment to a personal touch is important to him and explains why Wellesley has had such a strong track record over the past few years. “At the end of the day, I don’t see how you can replace someone like me speaking to a developer asking questions, and actually standing on the site and seeing what it is that we’re being asked to lend on,” he says.
“I don’t see how software could replace the personal element and the experience that some of us have. However, we clearly rely upon it to analyse the profitability of schemes.”