Saving Stream enables you to invest in existing loan agreements made between Lendy Ltd and its borrowers. Unallocated investor funds are held by us in trust on your behalf in a segregated client bank account so that it does not form part of our assets and would not be available to creditors in the event of our insolvency. Allocated funds are considered secured against either a) an asset that we have possession of or b) a property that we have a legal charge over.
Your investments are repayable to you via your Saving Stream account in monthly instalments of interest and capital repaid at the end of the loan term. We can guarantee investors interest payments for the duration of a loan's term due to deducting this total interest from the loan's net advance to the borrower.
Investor's capital is expected to be repaid at the end of the loan. If a borrower defaults with the repayment we either sell the asset that we hold, or auction the property that we have a legal charge over in order to raise the capital required to repay the investors in the loan.
If you need access to the money you have lent out before a borrower is due to pay it back, you can use our 'Secondary Market' functionality to sell your loan part capital to other investors. Once purchased this capital is then credited back to your Saving Stream account.
As with all peer-to-peer lenders, the biggest risk posed to investors is if one of their borrowers does not repay their loan, this means that lenders’ capital is at risk.
Unlike traditional Peer-to-Peer lending companies, we only participate in secured lending which means that the total value of the loan is secured against an asset such as a property. If the borrower does not repay their loan then we can sell the property to cover any shortfall. We only lend to borrowers who have a good quality property that we believe could be sold readily.
Before we allow each Borrower to receive their loan, we make identity, fraud and credit checks. We also use the Borrower’s credit reference, and certain additional Information that we verify, to assess the affordability of the loan. If we find that the information was inaccurate or deficient the loan will not proceed.
If a loan goes into default we will automatically contact you to make you aware that the borrower is in default and explain the next steps of the enforcement process that we will manage.
If Lendy Ltd were to stop trading for any reason it would present some risk to you in that the firm would no longer be able to manage borrower repayments back to your account. Because of this risk we administer our loans in a way that ensures that the arrangement fees payable in relation to these loan agreements are sufficient to cover the costs of administering them during any winding down process if we were to cease trading for any reason.
Investing in Peer-to-Peer lending involves risk to your capital. If you suffer a loss, you are not entitled to compensation from the Financial Services Compensation Scheme (FSCS). Although Lendy is regulated by the Financial Conduct Authority (FCA), this does not mean that customers’ funds are covered by the FSCS up to £85,000. Instead the FCA requires peer to peer platforms to hold a capital buffer and have robust plans to run off outstanding loans should any platform fail.
Selling your loan parts on the secondary market relies on an investor buying your loan part. Although average loan part selling time on the Saving Stream platform is less than 24 hours, this is not guaranteed and may you may experience a delay in selling your investment.