In order to ensure that P2P platforms do not accidentally take on the role of a principal/lender, loans in arrears will see all interest obligations accrue to the benefit of lenders. This will replace the process whereby Lendy would pay the first 90 days in interest on a loan to lenders and then recover that money from the borrower.
Whilst in some situations this may mean a delay in the receipt of interest payments for lenders (i.e. where a borrower is in arrears on interest) this will remove some ambiguities from the business models of P2P platforms.
However, appropriate risk management processes followed by lenders such as proper diversification should help reduce overall risks.
As a result of this change, we are updating our Overdue Loans Default Policy to reflect that we will no longer be servicing interest payments from our own balance sheet (known as “SBL” or Serviced by Lendy in the current Overdue Loans Default Policy [effective March 1 2017]).