Flexible peer to peer lending & borrowing

General Risks

When lending or borrowing on a peer-to-peer (P2P) platform there are general risks as follows:

  1. Data Theft, ID Theft, Fraud

    With ID theft going on there is a risk of a user fraudulently impersonating another. We are committed to ensuring your security and confidentiality and we request that you adhere to our guidelines for safe use. For example, do not give your login and password to anyone. Always ensure that you are logged out of the site before leaving your computer. Ensure that your username does not give away your identity.

    We have implemented many tests and checks to mitigate this risk: ID and address verification via Equifax, the Credit Reference Agency and fraud checks via CIFAS, the UK's Fraud Prevention Service, of which we are members. We also check that the user actually lives at the registered address and that the bank account details given actually belong to the user. We have secured your data, using encryption where necessary and the website from hacker attacks.

  2. Money Laundering

    Peer to peer sites do not present a high risk of money laundering. Nonetheless we have implemented many Anti Money Laundering ("AML") tests and checks which are more focussed on the lender. The basic checks are similar to those above, but there are more specific tests. We require passport photo ID and utility bills. We check for high account funds throughput combined with low volume lending, and any unusually large transactions. We also prevent transactions being attempted with connected persons.

  3. System, Operation or Administration Failure

    Software systems are vulnerable to "bugs" which may create unexpected results. Operations and administrative errors or omissions can also create unexpected results. Having designed and written all the systems and operational procedures in-house we have a deep understanding of how to correct or fix any "bugs" or faults.

  4. Failure of LendLoanInvest or Madiston

    Peer to peer websites are not parties to any loan contracts, but merely enable their agreement directly between the borrower and the lenders. In the unlikely event of Madiston plc failing, the loan agreements will continue as before. In this event Madiston plc will arrange a reputable Loan Servicing Company to continue to oversee the collection and distribution of repayments as before.

    Following a company failure, in the event of borrower default, the repayments continue to be collected by the reputable professional Debt Collections Agency ("DCA") that has been appointed by Madiston, on behalf of the lenders, to collect any arrears. The costs of the collections activity will not vary if Madiston plc has failed. Debts assigned to the DCA, will continue to be pursued where possible and any sums recovered returned as if this website and Madiston plc still existed.

  5. Bank Failure

    Prior to lending out your money, it is in our segregated Client Money Bank Account, and is therefore not part of the assets of Madiston plc. In this situation and the case of a bank failure the loss of your money IS covered by the Financial Services Compensation Scheme (FSCS). When lent out, it is NOT covered by the FSCS.

Borrower Specific Risks

When borrowing via a peer-to-peer (P2P) platform there are specific borrowers' risks:

    1. Damage to Your Credit Rating for Missing Repayments

      If you do not make the loan instalment repayments on their due dates there is a risk of damage to your credit rating. We define a loan as Status = "Late" if a scheduled monthly repayment has not been made in full and is past its due date to be credited in the Client Money Account. We define a loan as Status = "Arrears" if two or more scheduled monthly repayments have not been paid in full and are past their due dates to be credited in the Client Money Account.

    2. If your Loan goes into Default it will be Passed to a Debt Collector

      We use the Status = "Default" to indicate that full repayment of the loan, and not just the repayment arrears, is required if three or more scheduled monthly repayments have been missed, no arrangements have been agreed with the borrower and the Default Notification has been sent to the borrower. This is serious and means that we pass the loan to a reputable debt collector for recovery. These actions damage your credit rating, making it more difficult for you to get credit in the future.

Lender Specific Risks

When lending via a peer-to-peer (P2P) platform there are specific lenders' risks:

    1. Borrower Default

      When your money is lent out it is not covered by Financial Services Compensation Scheme. Because this is unsecured lending, the risk of borrower default on a loan may cause a reduction or even the total loss of your lending funds. Our estimated borrower default rate is 2.5%. However circumstances can change.

    2. Borrower Cancellation in the First 14 days of a Loan under the Distance Marketing Regulation

      Under the Financial Services (Distance Marketing) Regulations 2004, a borrower has the right to cancel a loan in the first 14 days after its acceptance by the borrower. If this occurs the borrower has to repay the loan with interest within 30 days from the notification of cancellation. In this situation, as a lender you receive your share of interest for the period.

    3. You are Required to Account for Tax

      For a lender lending as an investment activity, as opposed to a business, and because interest is paid to you without any deduction of tax, you may have to make a return of interest income to Her Majesty's Revenue & Customs ("HMRC"). This will depend upon your personal circumstances and your Personal Savings Allowance.

      At the end of the tax year we will make available for you to download an annual interest income statement. This will show the total gross interest you've received over the tax year.

      Further information is available on the GOV.UK website: https://www.gov.uk/guidance/peer-to-peer-lending

    4. Past Performance May Not be Repeated

      Past performance may or may not be sustained in the future. Therefore do not base decisions on past performance but on a considered view of the future. Lending and borrowing funds and their interest rates are subject to market influences, fluctuations and risks.