Peer2Peer Finance News August 2020 by Alternative Credit Investor

OPEN BANKING FINALLY TAKES OFF

Benefits for lenders amid Covid-19

ENGAGING WITH ADVISERS

>> 16

Property Bridges’ David Jelly talks to P2PFN

Will IFAs ever come round to P2P?

ISSUE 47 | AUGUST 2020

P2P lenders halt CBILS applications SEVERAL peer-to-peer lending platforms that wanted to take part in the coronavirus business interruption loan scheme (CBILS) have halted their applications, amid concerns of an uneven playing field between banks and non-bank lenders. Only four P2P lenders – Funding Circle, Assetz Capital, Folk2Folk and LendingCrowd – have been accredited to the emergency scheme, which is 80 per cent government guaranteed and provides loans from £50,000 to £5m. Lee Birkett, founder of JustUs, said the platform paused its CBILS applica-

tion after reports emerged that alternative lenders had been excluded from indirectly accessing Bank of England funding. Non-bank lenders cannot access the Bank of England’s Term Funding Scheme, which offers four-year funding at or very close to the base rate

to encourage lending. A report last month in The Sunday Times said that high street banks had blocked proposals to allow alternative lenders to have access to the scheme during the pandemic. “We were always pushing for direct funding from the Bank of Eng-

land,” said Birkett. “At the moment, the only lenders with the balance sheet to lend at scale are the banks, so there’s no point going live with £20m when we were going to have demand for a billion. We may revisit this if the government changes its policy.” David Bradley-Ward, chief executive of assetbacked P2P lender Ablrate, said he wanted his platform to be accredited for CBILS but doesn’t believe this will happen. As the scheme ends on 30 September, the British Business Bank (BBB) is more likely to focus on larger lenders that >> 4

P2P lenders question Defaqto ratings PEER-TO-PEER lenders have questioned the fairness and accuracy of financial product review website Defaqto’s star rating system. A number of P2P lenders have queried why they have been given low ratings when they have

had little contact with the website. Defaqto reviews and rates a range of financial products including P2P lenders, to help consumers decide where to put their money, and gives each one a star rating out of five. It has rated 23 P2P

lenders, with platforms such as RateSetter and Assetz Capital awarded five stars, but other P2P firms only have one or two. P2P pawnbroker Unbolted has one star but its co-founder Rito Haldar told Peer2Peer Finance News that this seems

misleading to investors as it does not mirror its performance or customer feedback. “I have no idea why we have one star from Defaqto and do not recollect having any conversations with them about this,” >> 4 Haldar said.

It has never been more important to keep up to date with the latest peer-to-peer lending news. These are extraordinary times and our team is working hard to keep you informed about how the UKâ&#x20AC;&#x2122;s P2P sector is responding and what new trends are starting to emerge. If you want to be the first to learn about the latest developments in the world of P2P, please purchase a subscription today. We offer a range of subscription options, starting at just ÂŁ1.95 a week. Please go to www.p2pfinancenews.co.uk/subscribe to buy a subscription today, so that you can enjoy unlimited digital access to P2PFN, with the option of a monthly print magazine. For more information on subscriptions, including overseas queries, please email tehmeena@p2pfinancenews.co.uk.

EDITOR’S LETTER

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Green Park House, 15 Stratton St, Mayfair, London W1J 8LQ info@royalcrescentpublishing.co.uk EDITORIAL Suzie Neuwirth Editor-in-Chief suzie@p2pfinancenews.co.uk +44 (0) 7966 180299 Kathryn Gaw Contributing Editor kathryn@p2pfinancenews.co.uk Marc Shoffman Senior Reporter marc@p2pfinancenews.co.uk Michael Lloyd Senior Reporter michael@p2pfinancenews.co.uk PRODUCTION Tim Parker Art Director COMMERCIAL Tehmeena Khan Sales and Marketing Manager tehmeena@p2pfinancenews.co.uk SUBSCRIPTIONS AND DISTRIBUTION tehmeena@p2pfinancenews.co.uk Find our website at www.p2pfinancenews.co.uk Printed by 4-Print Limited ©No part of this publication may be reproduced without written permission from the publishers.

t’s been another interesting month in the world of peer-to-peer lending, amid the ongoing debate about the role of alternative lenders in government-backed emergency schemes. Reports that banks had blocked non-bank lenders from accessing the Bank of England’s Term Funding Scheme were shocking but not unsurprising. As our front-page story shows, this has had a knock-on effect on some P2P lenders’ appetite for the schemes, which is a real shame. It’s clear from all of the industry stakeholders that the P2PFN editorial team has spoken to in recent months, that alternative lenders have a vital role to play in delivering governmentbacked emergency finance during the pandemic. The Treasury and the British Business Bank need to act now to make sure that their role doesn’t get ignored.

SUZIE NEUWIRTH EDITOR-IN-CHIEF

Peer2Peer Finance News has been prepared solely for informational purposes, and is not a solicitation of an offer to buy or sell any peer-to-peer finance product, or any other security, product, service or investment. This publication does not purport to contain all relevant information which you may need to take into account before making a decision on any finance or investment matter. The opinions expressed in this publication do not constitute investment advice and independent advice should be sought where appropriate. Neither the information in this publication, nor any opinion contained in this publication constitutes a solicitation or offer to provide any investment advice or service.

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NEWS

cont. from top of page 1

RY ST

BACK

whereas the majority of its investors are high-networth individuals and family offices. Additionally, some P2P platforms have voiced IND reluctance to apply for accreditation for the bounce back loan scheme (BBLS), which provides 100 per cent government-backed loans of up to £50,000. Funding Circle is the only P2P platform that has been approved to deliver BBLS to date. LendingCrowd said the cost of capital prohibits the platform from offer-

can deliver more money and quicker, he said. Instead, following “good conversations” with the state-backed development bank, he believes Ablrate will be accredited UR to other proO grammes to help small- and medium-sized enterprises, most likely after the bank’s attention is turned away from CBILS when it ends. P2P business lender ArchOver told Peer2Peer Finance News that it stopped pursuing its CBILS application because the scheme needs institutional funding,

ing BBLS, blaming lack of access to the Term Funding Scheme, so is instead focusing on CBILS. And Stuart Law, chief executive of Assetz Capital, said that the platform has no intention of applying for BBLS. “It’s impossible to fund unless you’re a bank and it’s completely not our customer type either– it’s typically for micro businesses and seems to have much higher fraud risk than our types of lending,” he said. However, other P2P lending platforms are still looking to provide the emergency loan schemes. Crowd2Fund is already accredited for CBILS and

plans to offer the loans once it relaunches, while Rebuildingsociety is currently looking to secure institutional funding before applying for CBILS. Crowd2Fund is already accredited for CBILS and plans to offer the loans once it relaunches, and focuses on lenders that can deliver the money. The spokesperson added that the lack of access to Bank of England funding is more relevant for BBLS than CBILS, as platforms should be able to raise the finance for CBILS. The Bank of England declined to comment about access to the Bank’s Term Funding Scheme.

at Defaqto, said the reviews are based on “facts not opinions,” unlike a customer review website. “Our experts select and analyse between 30 and 100 features or benefits for every product on the market,” he told Peer2Peer Finance News. “Each product is scored against those features and assigned a rating based on a scale of one to five so you can see at a glance how the products in the market compare.” Cartwright said Defaqto analyses P2P lenders by using its own consultants’ knowledge, as well as

considering market and regulatory developments, product offerings, industry trends and consumer research. He said Defaqto also looks at whether a platform is a trade body member, the accessibility of their loanbook and borrower data, customer support, rates, provision funds and mobile optimisation. The ratings are reviewed each February and there is no charge for inclusion. Platforms only have to pay a fee if they want to display the star ratings on their own material.

cont. from bottom of page 1 “I do remember speaking to them a long time back but then deciding against progressing with whatever commercial arrangement was being discussed. “We are one of the best performing P2P platforms when looking through any objective measure such as past performance, risk versus return or reputation and are currently flooded with investor funds.” David Bradley-Ward, founder of P2P business lender Ablrate, which has two stars, said he had no idea that the platform had been rated.

“We had an enquiry many years ago to complete their forms, but we never got around to it,” he said. “We have recently looked at them again and will probably send it over to them.” Peer2Peer Finance News is aware of at least one other P2P lender with a low star rating that has raised this with Defaqto and asked for clarification as there has never been contact between the companies. David Cartwright, head of insight and consulting for wealth and protection

NEWS

Folk2Folk calls for CBILS extension FOLK2FOLK is aiming to start accepting coronavirus business interruption loan scheme (CBILS) applications by the end of August and is calling for an extension to the scheme beyond its current end date of 30 September. The rural peer-to-peer business lender was accredited to deliver the 80 per cent government guaranteed emergency loan scheme for small- and medium-sized enterprises (SMEs) at the start of July. Since then, it has been preparing to deliver CBILS by getting the required institutional funding in place.

It said the British Business Bank has completed its due diligence of the platform but is now conducting an audit of the lender to review its processes. Folk2Folk said it will hopefully start accept-

ing applications by the end of August. It plans to serve existing customers first, before opening up to new borrowers. The platform has an initial target to lend £10m

in CBILS loans before the scheme is due to end on 30 September. “It’s been quite an intensive period and will continue to be until we launch the scheme,” Roy Warren, managing director of Folk2Folk, told Peer2Peer Finance News. “We’re confident everything will be in place. “There’s been comments that the scheme may extend, it’s quite likely. Having gone through an extensive process we can move the money quickly. “If the scheme is not extended the benefit to SMEs will be much less if we can’t deliver all of the funds.”

Greater FCA powers hoped to negate need for mini-bond ban THE UK Crowdfunding Association (UKCFA) is hopeful that extending the Financial Conduct Authority’s (FCA) financial promotion powers will negate the need for a permanent ban on marketing mini-bonds to retail investors. The regulator implemented a temporary intervention this year, amid concerns about how speculative illiquid securities (SIS) are marketed. But the trade body has warned that plans to make this ban

permanent could harm crowdfunding platforms as the regulator has said it could include firms offering other types of debt securities. The FCA’s aim was to stop a repeat of the collapse of mini-bond providers such as London Capital & Finance (LCF), where investors were misled into believing investments were ISA-eligible. But critics have said the FCA’s proposals would not stop this happening again as minibond providers, unlike

crowdfunding platforms, are not authorised. However, the Treasury has now proposed that the FCA should be able to approve financial promotions from unauthorised firms. It has proposed establishing a regulatory ‘gateway’ so any firm wishing to approve the financial promotions of unauthorised firms would first need to obtain the consent of the FCA. “This is a common sense move to clean up the mini-bond sector and will hopefully see

the withdrawal of a number of firms providing that service to companies such as LCF,” Bruce Davis, founder of crowd bonds platform Abundance and a director of the UKCFA, said. “We believe that these changes effectively negate the need for the imposition of the temporary intervention and will be considering our response to the consultation on the permanent changes in due course following consultation with our members.”

JOINT VENTURE

A day in the life of a Covid-era property developer John Davies, head of lending at Wellesley Finance, shares his daily routine before, during and after the pandemic

N A TYPICAL DAY, John Davies, head of lending at Wellesley Finance, would catch up with his emails, get into the office between 8am and 10am, attend meetings, and visit one of the many property development sites that Wellesley is funding, or planning to fund. This routine has been crucial to the growth of Wellesley Finance – allowing the platform to maintain a hands-on approach to each and every one of its loans, which in turn reduces the risk for each and every investor. But the Covid-19 pandemic has forced all alternative lenders to make major changes – and Davies is no exception. “Pre-Covid I spent quite a bit of time out of the office,” he says. “So working from home on a full-time basis was quite a novel experience – it took me a while to get into a routine. It was quite difficult for the first six weeks when we weren’t allowed out at all, but then there was a relaxing of the lockdown

restrictions and we were able to visit sites again while observing social distancing which almost brought my job back to normal.” Davies admits that at the beginning of lockdown he was not sure how effectively Wellesley’s lending business would manage. But despite the challenges of remote working, the platform has bounced back remarkably well. “We’ve adapted to working from home exceptionally well at every level,” says Davies. “Some of our sites were temporarily shut down but it was only for a matter of weeks rather than months. “We’ve seen much less than expected delays in construction which we’re very pleased about because there were some doomsayers who thought the end of the world was coming, which clearly hasn’t happened!” In recent months, Davies has

been back onsite again, and he has been originating new loans for the platform by tapping into his extensive base of contacts. “I am in constant touch with probably a few dozen people who are a reliable source of new business,” he says. “Typically, I will get an initial email or call saying this is the bare bones of the deal, does it fit Wellesley? If it’s a goer I will then spend time going through the documents, checking prices, checking the background of the developer and so on to the point where I’m comfortable that it’s a deal that’s doable. Then I will go to the site just to make sure its suitable for what’s being built, and then I will arrange a face-to-face meeting with the prospective borrower.” Post-pandemic, Davies expects his team to spend two to three days a week in the office rather than four to five days; and he predicts a possible fall in property prices towards the end of the year when the unemployment figures go up. But the fundamentals of his job won’t change. “The hands-on element of property development schemes is absolutely vital,” he says. “From a pure control basis, the physical attendance on site is absolutely essential.” This is what property lending comes down to when everything else is stripped away – experience, knowledge, and extensive oversight.

NEWS

Covid-19 could boost lending industry’s use of open banking COVID-19 has accelerated the lending industry’s adoption of open banking, stakeholders have claimed. The data sharing initiative – which mandates high street banks to share anonymised customer data with approved third parties – can be used to assess borrowers’ creditworthiness more accurately, which is particularly important during the pandemic-induced economic downturn. Daniel Napon, finance director and chief operating officer at peer-to-peer consumer lender Leap Lending, believes that the public health crisis as boosted the need for the initiative. The platform launched in December and requires all of its borrowers to share their bank transaction data using open banking.

Napon also suggests that open banking has made funding aggregator platforms recognise the benefits of the technology. “I think Covid-19 has definitely accelerated the adoption of open banking,” he said. “Before it was in the pipeline for brokers and lenders to adopt it and wasn’t a priority, but this has changed. “Open banking provides a detailed, real-time view of the situation, showing whether people have lost their job, been furloughed, or even borrowed a separate loan in the past couple of days. A lender would also be able to detect any income shock such as total or partial loss of income. “Without open banking,

lenders would have to rely on waiting for the next wage slip or self-declarations from borrowers to verify income or employment, but that’s not a reliable process. “Stakeholders understand that open banking provides a more accurate and reliable picture of a borrower and enables lenders to stay compliant with what the regulator wants regarding affordability. That’s why for them it’s a no brainer to accelerate the

adoption of open banking.” Aggregators including Loans Warehouse, RealRates and Freedom Finance are using open banking now, according to Napon, with others currently working on integrating the technology. Napon’s comments echo those of Robert McKechnie, open banking expert at consumer credit reporting agency Equifax, who recently said that the data-sharing initiative could kick-start lending amid the pandemic. “Once the economy starts to recover, the extra level of real-time data and insight open banking offers will be vital to restore lenders’ confidence and reinvigorate the supply of credit for businesses and individuals,” he added.

Rebuildingsociety gains access to open banking REBUILDINGSOCIETY is set to use open banking to manage client money and assess creditworthiness, after its technology provider White Label Crowdfunding partnered with TrueLayer. White Label Crowdfunding produces software for a number of crowdfunding and P2P lending platforms globally, including its sister business, Rebuildingsociety. Its partnership with

TrueLayer, which provides open banking application programming interfaces for fintechs, means that all platforms that use its software can now benefit from the data-sharing initiative. Peer-to-peer business lender Rebuildingsociety will utilise the technology on its app it launched last month as well as on its online dashboard. It will also roll out the technology to its appointed representatives, including

P2P property lending platform Sourced Capital. “It’s a big step forward,” said Daniel Rajkumar, managing director of Rebuildingsociety. “It’s the reconciliation of client money that makes it a very efficient way of managing their funds, including automation, to give customers a better journey and service.” Kieron Greeff, business development manager at White Label Crowdfunding, said it is really excit-

ing to be working with TrueLayer. “Our platforms are now open banking enabled which gives them real-time deposits that get reconciled through TrueLayer,” he added. “It’s a much better user experience, deposits are in real-time and instantaneous. “It’s exciting to be working in this area. All our platforms can have better, quicker interactions with banks, removing delays.”

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JOINT VENTURE

Revisiting wind-down plans is essential during Covid-19 Platforms need to revisit their wind-down plans, says Chris Laverty, partner and head of financial services restructuring & insolvency at Grant Thornton

IND-DOWNS OR partial wind-downs are set to come into focus in the peer-to-peer lending sector, as platforms seek to offset the risk presented by Covid-19. According to Chris Laverty, partner and head of financial services restructuring & insolvency at Grant Thornton, more and more P2P lending platforms are beginning to realise the value of maintaining an adjustable winddown plan, updating existing plans to accommodate suspension or restrictions in lending. This may include plans for a partial winddown should part of the platform’s lending be assessed as non-core or under-performing. “A partial wind-down happens because of a change in focus for the platform. For example, some platforms may choose to move away from property-based lending due to under-performance in this turbulent environment. It doesn’t necessarily mean it changes the corporate structure or anything like that, it’s just taking a type of borrowing that may have had its own portfolio and running it off,” explains Laverty. “There are a lot of platforms who have initially developed based on a certain product, which has performed well for the first part of its lifetime,” she adds. “And then either there is a market event like Covid-19, or perhaps there is a concentration of borrowing within the market leading to reduced margins, so the platform decides to restrict lending, suspend

trading or do something different altogether. The business then needs to decide how to economically run off the first product, particularly if there is shared resource for the rest of the platform. “We’ve spoken to a few platforms who are considering this, who would now like to run off an existing product and how this type of under-performance impacts their existing wind-down plans that have been submitted to the Financial Conduct Authority.” Covid-19 has only accelerated these adjustments to P2P wind-down plans. The economy has completely changed in the space of just a few months and Grant Thornton has already spoken with several P2P lending platforms about adjusting their wind-down plans to reflect the current economic climate. “We have supported a number of P2P platforms and talked to them about their wind-down plans and how to update them,” says Laverty. “In some cases, the platform has taken the decision to stop lending to certain parts of the market because they don’t want that to pollute the existing investor base.

“They are just trying to make sure that while they’re weathering this storm, they’ve got the right preparation and plans in place.” Grant Thornton has been looking at the P2P sector since 2019, but it has decades of experience working with financial services firms. Laverty has worked on a range of different wind-down plans – from solvent wind-downs, to insolvency events, to partial wind-downs. In every case, the focus is always on consumer protection, and regulatory compliance. “All investors and borrowers need a soft landing if the P2P platform needs to wind down,” says Laverty. “And the regulator is very focused on ensuring that those plans are in place – that they’ve been appropriately adapted for the operating model, that you have taken insolvency practitioners’ advice, and how the company can continue to service its customers even in an insolvency event.” It is this forward-thinking and risk-averse approach that leads to better wind-down plans being created, says Laverty. “It’s worth the investment,” she adds. “Doing things ahead of time in almost anything is worthwhile. This is something that you can then control because it’s in the company’s hands, whereas if you let yourself get into a distressed state then it’s no longer in your control. “Act early – the regulator requires it. And you can work with firms such as ours to put a future safeguard in place.”

PROFILE

Building bridges

Property Bridges founder David Jelly talks to Marc Shoffman about the Irish peer-to-peer lending market, the housing crisis and Brexit

IKE ITS UK NEIGHBOUR, Ireland has struggled for years with a housing shortage. However, the formation of a coalition government in June, following a period of no government since February’s general election, has resulted in new impetus to get building. Dublin-based peer-to-peer lender Property Bridges is ready to unlock the lack of funding for developers who suffer from a small choice of mainstream and alternative lenders to support their projects. The platform’s founder David Jelly explains how the lender is set to benefit from government commitments to support affordable housing as well as the opportunities presented by its upcoming position as the only English-speaking country in the EU, once the Brexit transition period ends. Marc Shoffman: What is the scale of the housing challenge in Ireland? David Jelly: There is massive demand for social or affordable types of housing in Ireland. It is estimated that Ireland needs 35,000 units per year. The country built 21,000 last year and 15,000 so far this year. Of the 15,000, 50 per cent will be bought by the government for social housing. That means very few units are actually going for sale on the open market.

There is not enough supply to keep up with demand. MS: How does the Irish P2P property market differ from the UK? DJ: The legal framework in Ireland is very similar, as effectively the Irish legal system was built from the British one. If we compare ourselves to the likes of CrowdProperty or Kuflink, our projects are more development focused than bridging. There is more of a gap in the market for development finance in Ireland and there is a lot less

competition across both the mainstream lenders and P2P here. We have a strong focus on helping developers fund social housing that the government has pledged to buy, so there is no exit risk. The Irish government doesn’t have the ability to build. What it does instead, is buy the completed properties from private developers. We fund a lot of projects like that. A lot of these houses are bought before they are even started so there is only development risk. That is a compelling opportunity. British investors can fund the loans on our platforms. We also

PROFILE

have lots of interest from investors based in the Middle East. The only friction point is that all our investments are in euros so they have to think about the foreign exchange issues. MS: How were you affected by the lack of government in Ireland? DJ: There were a number of months of negotiations to get the new coalition government in place. This will be forever known as the election that was dictated by housing. There is a massive housing crisis in Ireland. Some of the main parties lost ground as they haven’t been doing enough. There was a shift toward the left and there is now a huge amount of pressure on the new government to deliver affordable housing. That is why the government has pledged 50,000 homes during its first term in office. MS: What are your targets for 2020/2021? DJ: A lot of our growth has been through retail P2P lending and a couple of institutional investors. We are looking to scale the amount of lending we are doing and plan to lend about £40m next year with a strong focus on social housing. MS: How will Brexit impact you? DJ: Brexit will be a challenge, but it is unclear at the moment how badly it will affect us. On the plus side, Ireland has definitely seen a number of UK firms relocating to Dublin for their head office. We will be the only Englishspeaking country in the EU following Brexit and a lot of US firms will want to headquarter

in Ireland as a gateway to the European market. We focus on residential property but this would have a positive effect on the commercial property space. It is hard to say if European workers who went to the UK would come to Ireland instead. If you look at the Irish market during the property bubble when everything crashed in 2007, all the eastern European immigrants went home. They don’t seem to be coming back in great numbers to work in the construction industry. There has been a lost decade of skills in the Irish construction market and a lack of young people coming into the industry. If you are located in the EU and looking to move to an Englishspeaking country, you would probably be more inclined to move to Ireland as it looks like the UK will become more restrictive. Ireland would be the first choice. MS: How have you navigated the coronavirus crunch? DJ: Building sites were shut down for around seven weeks so projects have been delayed. None are in danger of going into default but their loan terms have been extended. We have managed that. There haven’t been payment breaks but we have given developers flexibility so there is no penalty for going over term. Our maximum loan-to-value has been reduced from 70 per cent to 60 per cent during the pandemic and we paused new lending in March and April to see where the market was going. We started lending again in May but have been more cautious. Despite the uncertainty, May and June have actually been our

biggest months of lending since we launched. MS: How are investors reacting? DJ: We have never seen as many lenders sign up as we have over the past couple of months. There has been increased appetite as investors see it as low risk and it is a way to diversify from the stock market. People have had a little bit more time at home to spend on managing their finances. We have had a wage subsidy scheme in Ireland so a lot of people will still have been earning a wage but not spending, so will have more disposable income. MS: Would you like to see P2P regulation introduced in Ireland? DJ: The Irish P2P market is not currently regulated. When we launched in 2018 and were drafting our terms and conditions, all our research and discussions with solicitors pointed to EU-wide regulation coming in 18 months. As I sit here today, those solicitors and experts will probably still say it will come in 18 months. It will come in eventually but the EU has had bigger issues such as Brexit and coronavirus to deal with. As an investor, I would want to invest in a market that was regulated. We are set up in line with UK best practice – we follow anti-money laundering guidelines and don’t hold client cash. The Financial Conduct Authority in the UK has taken a real lead on this but there have still been collapses such as Lendy. There are not a huge number of P2P lenders in Ireland, but those that are around have good reputations.

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JOINT VENTURE

Education-backed loans offer respite for investors Amid an uncertain investment climate, education-backed peer-to-peer loans could be the answer, says Rishi Zaveri, co-founder and chief executive of Lendwise

DUCATION-BACKED loans could become an increasingly attractive option to peer-to-peer investors, as the impact of the Covid-19 pandemic continues to weigh on traditional P2P markets. Currently, Lendwise is the only UK-based platform that specialises in P2P student loans, offering competitively-priced funding for postgraduate students across the UK. To date, the platform has recorded an average return of eight per cent per annum for its investors – a mix of high-networth-individuals, retail investors and family offices – while allowing students to access the funding they need to further their career prospects. “I think one of the impacts of Covid-19 might be the fact that people may have to reskill or upskill from where they are so education should be in demand,” says Rishi Zaveri, co-founder and chief executive of Lendwise. “And alongside that you’ve got the competition for jobs, so in many cases it helps to stand out by having a masters degree, MBA or specialist training. “All of that tells us that education will increase in need. And ultimately, we’ll be a beneficiary of that because the cost of education is high, and there needs to be a way to fund it.” Lendwise was founded by Ioannis Georgiou and Kypros Mouzouros alongside Zaveri, who spotted a

gap in the market. “There wasn’t a private student loan offering which we felt was serving the market correctly, especially for the postgraduate market,” he says. “If you’re eligible for a government loan you can get just over £11,000, but that just about covers tuition fees if you’re lucky and is well-short of it for some of the higher-ranking universities. So where else do you turn? The banks are not handing out many consumer loans at the moment, or if they do, they expect some collateral. But your average mid- to late-20s post-

graduate student is unlikely to have collateral in the form of a property. “We felt the market was under served. So that’s why Lendwise was formed, looking through the very specific lens of educational finance.” Zaveri knows that most postgraduate students will not yet have had the opportunity to build up a good credit score, which then excludes them from many mainstream funding channels. But as Zaveri points out: “if you are doing an MBA or a masters, your best earning years are still ahead of you.” Lendwise analyses each student’s future earnings potential by looking at the course they are doing, where they’re doing it, and the average employment rate amongst a host of other factors. All of that data is analysed, and the outcomes are applied to each individual borrower and factored into the lending decision. And then there is the social element. Lendwise attracts investors who want to make good returns while investing in the future of the economy by helping to train our future doctors, lawyers, businessowners, and engineers. “I think everyone’s particularly looking to achieve two things – one is diversification of their investments, and the other thing is the social impact,” says Zaveri. “You’re changing someone’s life for the better. That’s what an investor gets – returns, while making a difference.”

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JOINT VENTURE

P2P platforms at risk from cyberattacks Andrew Beckett and William Rimington, managing directors at Kroll’s EMEA cyber risk practice, reveal the cybersecurity issues that peer-to-peer lending platforms must address

EER-TO-PEER LENDING platforms need to take a more proactive approach to cyber risk management, according to Andrew Beckett (pictured left) and William Rimington, (pictured right) managing directors at Kroll’s EMEA cyber risk practice. “We’ve worked with fintechs in the past who have employed incredibly talented people in their start-up years, but we have been able to drive a bus through their security,” says Rimington. “Having a testing mentality from a functional design perspective is very different than having a functional design mentality. This is where our team comes in.” Kroll, a division of Duff & Phelps, has been on the frontline of cyber risk management for years. Last year, Rimington and Beckett helped more than 2,000 companies bolster their cyber security, and since the beginning of this year, Kroll has seen an increase in companies asking them to test their apps and platforms. The normalisation of remote working is set to make cyber risk management an even higher priority for all companies – and P2P lending platforms should take note. “The P2P world might find the regulator is an awful lot more interested in the industry as a whole than it has been in the past,” says Rimington. “I know it’s something that the FCA hasn’t really focused on, so that regulatory environment

might find itself shifting in order to keep transactions secure.” The dangers of ineffective cyber risk management reach far beyond regulatory concerns. It is surprisingly easy for a hacker to access a company’s internal database through the smallest crack in the system. Furthermore, cyber attacks are becoming more sophisticated. “It’s an arms race,” says Beckett. “Hackers are always getting better at what they do and we’re trying to keep the industry at least equal to if not one step ahead of what’s coming down the track. “That’s why it’s so important to have really robust teams working on it. Quite often, a lot of our work happens after an event because we’re mopping up after a breach. It’s good to see that we are more proactively engaged these days and I think that’s a sign that the industry recognises that there is a requirement to invest in constantly improving their security.”

“A lot of companies are still only using a simple password for access into email,” adds Rimington. “Which is breakable – there are tools for brute forcing passwords, in fact they will deliver the password relatively quickly. And once you’re in the email you can begin to take over the account. “You can legitimately use that account to send emails and that then manifests itself in what we call ‘business email compromise’ – for instance, requesting a diversion of funds into an unknown account. And that happens a lot. That is a multi-billion-pound industry.” P2P lending platforms may be tech-savvy, but Kroll’s experience has shown that tech awareness is not enough. New cyber attacks are happening all the time and the cost to the affected business can be enormous. The only way to avoid a cyber breach is to call in the experts.

IFAS

Engaging with IFAs

What more can be done to attract financial advisers to the peer-to-peer lending sector? Michael Lloyd reports

Tâ&#x20AC;&#x2122;S COMMON KNOWLEDGE that independent financial advisers (IFAs) have always been reticent about the peer-topeer lending sector. Over the past few years, many platforms have devoted endless time and money

to winning over the IFA market, with limited success. So why does it feel like so little progress has been made? There are a variety of reasons why IFAs are still cautious about P2P: a lack of education or

awareness about the products on offer; the fact the P2P lending sector does not have financial services compensation scheme protection; the relative nascence of the industry; and the occasional piece of bad

IFAS

a pre-conceived idea of the risk involved. This makes it much easier for IFAs to ‘sell’ these traditional investment classes to even the most inexperienced investor. By contrast, the P2P lending sector is still considered to be relatively new, and its shorter track record means that it has not yet completed a whole economic cycle and proven that it can survive in a downturn. Of course, the Covid-19 pandemic and inevitable recession will finally put that argument to bed. But for now, with just 15 years of history to draw from, advisers find it difficult to assess if P2P is low, medium or high-risk. This poses a challenge for any IFAs

there are more resources available, and more spare time to spend researching alternative investment opportunities. IFAs lead busy lives and many have come to depend on using investment portals where they can easily apply for whatever investment they are interested in for their clients. Some P2P platforms such as Octopus Choice – although it is not currently lending amid the pandemic – have developed their own portals for IFAs that are simple to use and favoured by this community. “I don’t think many platforms are IFA friendly,” says Carl Roberts, chartered financial planner, and founder and managing director of

“ I think IFAs should gain more comfort through the fact the sector is well regulated”

press following the high-profile collapses of platforms such as Lendy and Collateral. The professional indemnity insurance costs for IFAs is another reason, as insurers are wary of any alternative investment, not just P2P. Advisers tend to stick to plain vanilla asset classes because they are easier to understand and defend in the event of a complaint. And of course, investments in equities, bonds and property have a long track record which means that many investors will already have

looking to advise on P2P. “It’s difficult for IFAs to engage with the sector,” says Anthony Carty, group financial planning and business development director at self-investment specialists Clifton Asset Management. This is the unfortunate reality of the P2P/IFA relationship. Education is obviously needed, to show IFAs the risks and returns of the sector and where P2P can fit in their clients’ portfolios. More third-party risk assessments of P2P may also help to improve engagement with advisers. But it’s not just down to the platforms. IFAs also have a responsibility to seek to upscale and engage with the sector in order to advise clients with a wider knowledge of investments in their toolkit. This may be more likely at a larger IFA firm, where

RTS Financial Planning. “We’ve used Octopus Choice; one of the main reasons is they’ve built up a good, long-standing relationship with the IFA world. “They were in the Enterprise Investment Scheme space and built up a good reputation through that.” Industry onlookers have suggested that more platforms should introduce IFA-friendly portals and products to encourage uptake among the adviser community – but these products have to be suitable for their clients, and they must be easy to understand and to market. Innovative Finance ISAs (IFISAs) have been touted as an attractive product for IFAs, due to the widespread recognition of the ISA brand among individual investors. However, it is down to the platforms to communicate these benefits to IFAs in a way that is compliant with

IFAS

the Financial Conduct Authority (FCA) marketing restrictions. “P2P needs to ensure the right products are marketed to the right people and to be careful that IFAs know exactly what the features of the products are,” says Mark Turner, managing director, regulatory consulting at Duff & Phelps.

everyday investors who pledge to put no more than 10 per cent of their portfolio in P2P) and those receiving regulated financial advice. This only heightens the importance of winning over IFAs, as they could unlock a whole new segment of the market for P2P platforms. While regulation is important,

“I think IFAs should gain more comfort through the fact the sector is well regulated.” In December, the FCA introduced a raft of new regulations into the P2P lending sector, including a provision which states that platforms can only communicate ‘direct-offer financial promotions’ to certain investors, including high-net-worth or sophisticated investors, restricted investors (the

ultimately IFAs want to see evidence of consistent asset performance. A huge reason why many advisers have avoided P2P is the fact the sector hasn’t been through a whole economic cycle and thus does not have any proof of how it would perform during a downturn. Covid-19 is providing this test and platforms must pass it. To attract more IFAs the sector needs to prove itself during the crisis,

“ As long as the lack of choice, flexibility and access is there that will continue to provide a challenge”

avoid any platform failures and return to pre-Covid-19 liquidity. The majority of platforms are faring well so far, although some have stopped lending during this time, including Octopus Choice and Lending Works, and we are still only at the beginning of what could be a severe recession. Yet, the sector is confident it will survive. Those platforms that can show that they have provided a diversified source of income and have managed risk well in this difficult time, will stand out for IFAs. Furthermore, the downturn may show that P2P is even more attractive than other assets, such as stocks and shares, as it is does not experience the same level of volatility during economic instability and tends to offer fixed, inflation-beating returns. “Lots of P2P lending platforms are holding out so hopefully IFAs will be more comfortable referring clients to platforms that have proved

IFAS

they can manage through a difficult economic downturn,” says Daniel Rajkumar, founder and managing director of Rebuildingsociety. When Covid-19 is a distant memory, and the P2P survival stats are in, the advocacy work will need to begin. There is no shortage of analysts who can provide deep and frequent commentary on stocks and shares investments, for instance, as well as making predictions about future performance. These insights coalesce to give advisers a sense of the viability of a particular investment opportunity, making it easier for them to make informed decisions about their client portfolios. However, in P2P there is very little independent data to draw from. This makes it much more difficult for an IFA to make a recommendation. They effectively have to do their own homework on P2P. More third-party analysis and commentary is needed – from analysts, from commentators, and from trade bodies such as the recently-established 36H Group. A few independent due diligence platforms already exist. In:Review collates third-party feedback on alternative investments such as P2P lending, in a way that is easy for IFAs and potential investors to digest. Meanwhile market data portal Brismo compares the performance of different P2P lending platforms, although it does not contain data from every lender in the sector.

This is another reason why platforms need to target the larger IFA firms – they have the time and resources to compare platforms and produce their own due diligence portfolios. “Platforms that don’t display data and offer their loanbooks up for independent scrutiny should never be considered by IFAs,” says Mike Bristow, chief executive of CrowdProperty. Carty adds: “As long as the lack of choice, flexibility and access is there that will continue to provide a challenge.” IFA Carl Roberts does not believe the sector has done enough to target advisers and attributed this to high costs and the fact they may be used to working with, and marketing to, investors directly. “But until platforms do, P2P won’t be on the radar of IFAs,” he adds.

“ You’ll get more advisers coming to P2P

as it becomes clear that it’s not susceptible to immediate mood swings from investors in the same way as equity

”

The fact is that there are some IFA-friendly P2P products, and IFAs are engaging with P2P lenders to a certain extent. But more progress is needed. Engagement with advisers may have been interrupted by Covid-19 but the pandemic also provides an opportunity for the sector. It is vital that P2P survives this economic downturn and continues to offer respectable returns for investors, while managing the inevitable defaults that will come with any recession. If the sector comes out well from Covid-19, it will show that the P2P lending model is operationally robust and should be on the radar of every IFA in the country. “I think IFAs will come around and won’t be able to ignore P2P forever,” says Lisa Best, head of financial services content at alternative investments research firm Intelligent Partnership. “It’s another alternative that can provide income for clients and I think you’ll get more advisers coming to P2P as it becomes clear that it’s not susceptible to immediate mood swings from investors in the same way as equity.”

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JOINT VENTURE

Catching the regulator’s eye

James Dingwall, founder and chief executive of Thistle Initiatives, delves into the current compliance challenges facing the peer-to-peer lending sector

T’S FAIR TO SAY THAT THE alternative lending sector has faced challenges in recent years, with the regulator’s beady eye right on point. The Financial Conduct Authority (FCA) has scrutinised mini-bonds and listed bonds, and has now turned its focus to peer-to-peer lending. The FCA paper CP20/08 has the required outcome that mini-bonds and most listed bonds now deemed “speculative illiquid securities” should not be promoted to the general retail market. These types of investments were generally promoted to retail investors, often via an Innovative Finance ISA. The decision to effectively ban the promotion of such products to the general retail market was partly prompted by the demise of providers such as London Capital & Finance and Blackmore Bonds but also because of other issues identified by the regulator. The FCA’s concerns were centered around higher-risk lending to individuals using misleading financial promotions, limited assessments of suitability and a lack of due diligence on investments. Meanwhile, the P2P sector is not without its own troubles. Lendy tumbled into administration in May 2019 owing investors £152m, followed by Funding Secure. We have seen several platforms cease to lend in 2020 and there are likely to be more closures. Due to these issues with the alternative lending sector, customer perception of P2P is changing. Customer acquisition costs are

increasing. Most platforms are struggling to attract new investors. It’s a difficult time. There are also greater regulatory requirements. P2P platforms need to ensure their financial promotions are compliant, that they conduct appropriate due diligence and that the investor understands the risks involved. The FCA recently introduced investor marketing restrictions for the sector, mandating platforms to offer appropriateness tests to all potential investors. It’s important that investors understand that P2P is a high-risk, illiquid investment, with no secondary market on many platforms and no financial services compensation scheme coverage. There is also a requirement for adequate due diligence. It’s fair to say that the FCA guidance has evolved over the years. We do, however, all know the rules of engagement: comply with the FCA requirements on issuing credit; comply with your own credit policy; and comply with what you have promised your investor in your terms and conditions. The outcome should platforms fail any of these test points is gen-

eral redress. However, it should be noted that any failure is not limited to one investor, but to all investors who invested at that time or in that particular investment. Therefore, platforms could end up having to redress every investor, especially if they failed to conduct adequate due diligence on a specific investment. With an increased number of P2P firms heading towards administration and claims management companies hovering like hungry birds of prey, this might just turn into a bigger problem than we all think. However, it is important to underline that success in this market can still be achieved and it has been great to see some platforms performing well despite this economic environment. My advice is simple: know your risks. Platforms need to assess financial promotions regularly, make their suitability test specific to the risks of their platform and proactively review their due diligence. This can be done internally, or via specialists. I would also recommend reading and answering questions from CP20/08 to understand how that guidance would affect your business model if such rules were to come into force. Thistle Initiatives is an award-winning compliance consultancy, offering expert advice and support across the financial services sector. For more information on the range of services we offer, visit thistleinitiatives.co.uk or call 0207 436 0630 to speak to a member of the team.

OPEN BANKING

The need to share data

Open banking was heralded as a game-changer for financial services, yet uptake has been slow. Michael Lloyd investigates why more peer-to-peer lending platforms should be adopting the data-sharing initiative

PEN BANKING HAS been a source of much discussion in the fintech world – so why then are so few peer-to-peer lending platforms offering it? With the City regulator’s more stringent affordability rules and Covid-19 introducing challenges in assessing borrowers’ ever-changing financial situations, it is more important than ever that the entire financial services industry wakes up to this and adopts the technology. And P2P lending platforms are perfectly placed to act as pioneers. Open banking is simply the process whereby banks share people’s personal data, with their permission, with thirdparty financial service providers

through application programming interfaces. But for P2P lenders, the main benefit comes in the form of assisting in lenders’ credit processes when assessing affordability. Yet few P2P lending platforms use the data-sharing initiative. Those that do include Lending Works, RateSetter and most recently Leap Lending, which launched in December and requires its borrowers to share their bank transactions data via open banking, among others. P2P lending platforms can partner with credit risk firms such as Credit Kudos or CRIF Realtime, which use open banking to view the banking transactions of borrowers to provide a more accurate and up-to-date proof of affordability, and at a quicker rate.

This is compared to that of traditional credit bureaus which use data that is up to 30 days old, or simply request bank statements which are easily forged. By contrast, open banking provides up-to-date financial information and is thus much better at assessing creditworthiness. For instance, open banking can help to assess whether growing startups can afford loans as their finances are ever changing, and to discover whether borrowers with a thin credit file – such as younger people – can afford repayments by looking at their income and expenditure. The ability to quickly and concisely assess affordability should make open banking particularly attractive to the alternative lending sector,

OPEN BANKING

especially given the shape of the Financial Conduct Authority’s (FCA) ongoing regulations in this space. Stricter affordability rules from the FCA have already caused problems for a number of lenders, causing them to be more cautious so that they lend responsibility. This reinforces the need for open banking because the datasharing technology shows lenders a more accurate, up-to-date credit profile of borrowers. “Using open banking is the best way to assess affordability,” says Matt Schofield, co-founder and chief technical officer of Credit Kudos. “Affordability assessments are not a catalyst for open banking, they're speeding up its adoption.” The Covid-19 pandemic makes the adoption of these affordability assessments even more urgent. By making full use of open banking technology, platforms can access up-to-date information to show whether borrowers can afford loans and if they have lost their jobs or been put on furlough in recent months. This can offer some crucial insight into a borrower’s ability to repay their debts in the months and years to come. It is an unfortunate reality of any financial recession that many people may start looking for loans they cannot afford, and as we’ve seen before in the 2009 credit crunch, this sort of bad borrowing behaviour can have an enormous effect on the wider economy. During the lockdown, Leap Lending has seen more interest in open banking from other companies, including competitors, asking after their experience in the field. “With the current situation, it’s a must have,” says Daniel Napon, finance director and chief operating officer at the platform.

“There’s uncertainty with furlough and people losing their jobs and the economic situation, so you need to understand in real time who your customers are. A credit report will not provide that information in real-time.” William Rist, head of partnerships at Lending Works, which has used open banking to assess borrowers’ affordability since the start of 2019, believes that more P2P lending platforms should be utilising it. “As long as you can use that data to the benefit of customers then absolutely more should be offering it,” he says. However, Leap Lending’s chief executive Fawzi Kyriakos-Saad has gone one step further, arguing that lenders shouldn’t just be adopting open banking, but that it should be a requirement from the regulator. “Everyone who says they have

“ Using open banking

is the best way to assess affordability

”

done an affordability test without having access to accounts, has done one by asking clients to give them an idea of their spending,” says Kyriakos-Saad. “I think open banking ought to be something that’s not an option, but an obligation.” Assessing affordability is just one of many benefits of open banking, alongside other advantages such as preventing fraud. Lenders can verify a potential borrower by seeing if their name matches that on their bank account, giving them confidence they are lending to the right person and reducing the risk of fraud.

Leap Lending has actually identified a few potential cases of fraud where the name of the applicant and bank account owner were different. “We’ve caught cases and you can see they are not who they say they are,” says Napon. “Before open banking, people could impersonate others or steal their identity, but with open banking, borrowers can’t unless they have their login for their accounts.” Leap Lending also uses open banking to look for evidence of irresponsible financial behaviour, such as gambling habits. If excessive, the platform will reject the applicant. Furthermore, in a competitive lending environment, consumer loan platforms are often chosen by borrowers because they offer the benefit of a dynamic rate, whereby after every three months the borrowers’ rate over the lifetime of the loan could go down if their debt is reduced by five per cent. However, this service can only be offered when the platform has access to the kind of up-to-date data that open banking makes available. Despite the various benefits open banking brings and the fact that FCA affordability requirements and the uncertainty from Covid-19 make it an important time to adopt the technology, little progress has been made by the P2P sector in tapping into open banking. This may be due to the fact that open banking is a relatively new tool which has emerged at a time when privacy concerns and cybersecurity risks are a top concern for consumers. Open banking was only officially introduced in the EU in 2016, and in the UK in 2018, and it takes time for lenders to build out the

OPEN BANKING

new customer journey, integrate technical aspects, test, learn and gain confidence in the new open banking approach, as well as for customers to trust it. Many consumers have been wary about sharing their data, although more are now getting the message about how secure and financially beneficial open banking can be. Consumers have full control over their data with the ability to accept and reject their consent to sharing it at a click of a button. Another reason for a slower rate of adoption is that open banking is unknown territory for the banks – they have had to completely change their model to support it. “Open banking is gaining momentum by the month, especially for lending use,” says Dan Weaver, head of innovation at Equifax UK, which provides open banking solutions for financial services companies. “The initiative was only launched in January 2018 and its impact was never expected to be instantaneous. We are now seeing this process come to fruition and expect uptake to continue to grow throughout the coming year.” Credit bureaus have reported that consumer uptake of open banking has increased in the past six months. As more and more consumers become used to sharing their data, integration of open banking becomes less of a challenge for P2P lending platforms. Leap Lending launched with open banking integral to its model in December and another P2P lending platform – Rebuildingsociety – is now using the technology as well. Rebuildingsociety’s technology provider White Label Crowdfunding

has partnered with TrueLayer, enabling it to use open banking to reconcile client money and assess creditworthiness. “I think open banking is a brilliant development that’s been long awaited and anticipated to help platforms to transact efficiently,” says Daniel Rajkumar, founder and managing director of the platform. Meanwhile, ‘big three’ platform RateSetter offers open banking on the borrower side and sees the potential to expand the use of it beyond loan applications, for example, in the collections process. “Open banking is here to stay, and I expect P2P lenders and other financial services platforms will use it much more as customers become aware of the benefits and take-up grows,” says Michael Hoare, chief credit officer at RateSetter. As fintechs, P2P lenders are well placed to be at the forefront of open banking adoption and innovation. These platforms already possess better technology than some banks, and they are generally more agile and able to adopt new technology more quickly.

“More people are talking about open banking now and I think P2P will be one of the first sectors to see it moving and will become a better sector for it,” says Glen Keller, chief product officer of CRIF Realtime. Open banking is definitely here to stay, and it looks like P2P is gradually making headway into this area. It is clear that affordability assessments are vital – and there is no room for error when it comes to the FCA’s requirements. As the Covid-19 pandemic fades into an economic recession, the need for quick lending decisions and easy access to finance is only going to grow. Progress is being made, albeit slowly, so perhaps more of a collective push is needed to promote open banking. “Open banking has taken longer to gain traction – it has been more a subtle beat than a revolution – but there’s been a recent uptake in the percentage of customers using it,” says Keller. “I think the industry needs to get together and hammer home the message that it’s safe and secure, easy and quick, and regulated.”

PROMOTED CONTENT

The Covid-19 pandemic and learning from previous crises Paul Zalkin, partner, restructuring and insolvency at business advisory firm Quantuma, explains what platforms should be aware of during coronavirus

OR ANY BUSINESS adviser, the consequences of the coronavirus pandemic has called for an especially dynamic approach. However, whilst phrases such as ‘the new normal’, or words such as ‘unique’ or ‘unprecedented’ may be catchy, they do little to create clarity and, in many ways, are misnomers. In reality, sense can be made of the situation and we do have the tools to help businesses navigate through it. Prior to Covid-19, the world last experienced the devasting effects of a global pandemic in 1918 – beyond living memory (for most of us). However, on a granular level, many of the macro-economic consequences of Covid-19, and the issues facing businesses large and small, form part of our collective knowledge based upon our experience of more recent events. Massive structural funding and central planning helped rebuild the world’s economies after the devastation of the Second World War; recessions involving mass unemployment have been navigated by nations throughout the life of capitalism; most conceivable forms of macroeconomic structural change have been faced during the 20th and 21st century – most recently the global liquidity crisis of 2008. We have been here before, at different times and in different circumstances. This is a point worth making because it provides reassurance

that there is precedent upon which strategies can be based and decisions made as the UK gets back to business. It also reminds us that we will make it through this crisis. When it comes to helping UK PLC, peer-to-peer lending platforms have a central role to play, especially given many are now authorised as lenders of the bounce back loan scheme and coronavirus business interruption loan scheme (CBILS). It’s therefore worth considering the lessons we’ve learned from past crises and reminding ourselves of the specific risks lenders face when writing business during times of economic uncertainty. Faced with immense personal stress, precipitated by the possible destruction of a company which may represent their life’s work, some business owners may act irrationally and make poor decisions. Experience shows that this can manifest in various behaviours:

the wearing of rose-tinted spectacles in the myopic belief that everything will be okay, despite overwhelming evidence to the contrary; ‘ostrich syndrome’, hoping that by burying one’s head in the sand, the storm will blow over or ‘rabbit in the headlights’ syndrome, standing, transfixed by the problem, whilst the juggernaut bears down… More cynically, a very small minority will choose to act in bad faith, for instance, seeking to borrow funds to extricate their business from obligations which have been personally guaranteed, or inflating the value of their company’s net assets to secure more funding than it is able to service. Those who lend against receivables will also know that the practice of ‘fresh air’ invoicing becomes more prevalent when the chips are down. The lesson for all responsible lenders, now, more than ever, is to price risk on a portfolioby-portfolio basis, taking these behavioural factors into account, or, for more relationship-driven lending, to ensure that suitably probing questions are asked during the underwriting process. Equally, lenders must be alive to the fact that some corporate borrowers may see new forms of lending – for instance, a CBILS loan – as a panacea when, in fact, it will simply exacerbate their problems. For that, we turn to another of life’s lessons: sometimes you need to save people from themselves.