The Money Platform is defined as a High-Cost Short Term Credit lender (“HCSTC”). By nature of the product and the typical industry default rates, all loans can be defined as “High Risk” and priced accordingly irrespective of the specific segment of loan term, amount or customer profile (as sub-segments of the “high risk” overall classification).
Pricing and financial treatment of customers was updated post the FCA’s investigation in 2015 – ‘Price cap on high-cost short-term credit’ report. As a result, the maximum fees chargeable under a high-cost short-term credit agreement are:
It should also be noted that The Money Platform performs maximum forbearance for any customer in difficulty, where interest in frozen at 0% and payment plans arranged within fair, reasonable and affordable timescales as soon as the customer enters into dialogue with the Collections department.
The Money Platform has chosen to adopt the typical 0.7-0.8% pricing as our financial model has determine this is the required level of charges to ensure a profitable sustainable platform, whilst reasonable and fair lender return once defaults and operational costs have been considered.
The expected default rate for The Money Platform is estimated to be 4.6% of all loans made via the platform, based on modelled default rates on historic loan data tested on The Money Platform’s current lending criteria. See the "Outcomes Statement" for more information. The target default percentage is not the percentage of borrowers that miss payments but the final loss rate after all collection avenues have closed and repayment plans completed.
The lender estimated annual rate of return is 5.5%, considering fees, default rates and taxation on the interest received. The amount of income tax payable is dependent on individual lender circumstances and may be subject to change in the future.
You can read more about Lending with The Money Platform on our Lender Risk Statement
We operate the The Money Platform a service that matches lenders with borrowers, and to facilitate credit agreements between them. Additionally we administer and manage every aspect of these loans on behalf of lenders.
When registering as a lender with The Money Platform and agreeing to these Service Terms Lenders appoint The Money Platform as agent with regard to the origination, negotiation, administration, collection and management of loans. For the avoidance of doubt this The Money Platform's role includes but is not limited to:
Lending with The Money Platform is regulated by the FCA, but is not covered within the Financial Services Compensation Scheme (“FSCS”). You may receive less interest than you expected, lose some or all of the capital you invested or it may take longer than expected for you to receive your money back. In addition, if The Money Platform has insufficient capital to continue as a sustainable business, the company will voluntarily enter a wind-down scheme. The Money Platform holds a monthly Board meeting which includes as part of standard business review the liquidity of the platform and its relevance as a going concern. It is at the Board meeting where members will make an active decision on if the implementation of the wind-down plan is required.
Details of the wind-down scheme are documented internally at The Money Platform, shared with the FCA and include a 12-month window for the collection of all open loans. The risk to the lender is mitigated because all loans are for a maximum of 3 months, therefore a 12-month window has been chosen to give sufficient time for loans to complete naturally or include an extended time period for collections activity or re-arranged payment schedules to complete. Due to the reduced risks during wind down and the limited financial resources required, it is fully expected that the process will be orderly. It is not expected that insolvency practitioners will be required.