Our Role

open account
 

In this section, we disclose what its the role of Connective Lending as a Peer-to-Peer ("P2P") lending platform.


What role does Connective Lending play in pricing a P2P agreement?

Connective Lending operates a P2P platform using the pricing model. This means the platform sets the price of the agreement and the lender picks the loan. When setting the price of the agreement, Connective Lending carries out vigorous due diligence on the asset. This due diligence assists us to determine the risk a particular loan carries and helps us to accordingly set the price of the agreement that we see appropriate against that risk. The price is set by the loan amount which is determined by the value of the asset for pawnbroking loans.

It remains the choice of the lender to participate in any loan Connective Lending places on to its platform for funding. You must consider if you have the necessary experience and knowledge in order to understand the financial risk.

What due diligence is undertaken against the borrower?

Connective Lending carries out extensive due diligence on its borrowers to understand their individual unique requirements and proposition. The type of due diligence undertaken includes where necessary, independent or in-house valuations, scrutiny on the exit strategy (in the event the loan defaults), and proof-of-ownership. Further details regarding our due diligence process can be found on our Due Diligence page by clicking here.

How is the loan risk assessed?

Assessing the risk of a particular loan requires the firm to undertake due diligence on the borrower and the asset to comprehend which area may affect the performance of the loan during the term of the loan agreement.

Pawnbroking

For a pawnbroking loan, one area of risk which is assessed is against the asset that is being pledged. Here we carry out due diligence on what the realisable value of the asset in auction or trade will be, to help develop an understanding of the market this asset could be sold into in 6 months’ time. Asset values can fluctuate over time, depending on the type of asset which is being pledged, hence we rely on third-party specialist valuers to help provide an accurate value of the asset that’s being pledged.  

Fraud is also another area where due diligence is required to ensure the borrower is the true owner of the asset. As part of our due diligence process, we will request proof of ownership by obtaining receipts, insurance documents, assess if the item is in its original packaging, V5 documents (vehicles) and other such documentation to help prove the asset belongs to the borrower. Where this cannot be obtained, we question the borrower to determine if they are the true owner of the asset being pledged. 

Loan Payment and Default Procedures

Late payments and loans defaulting are inevitable within the lending industry. However, having clear procedures in place for dealing with such scenarios when they do occur can assist in minimizing disruption and costly delays.

Connective Lending has set out a clear procedure for dealing with loans depending on the nature of the loan agreement. For pawnbroking loans, we hold the assets in our possession during the loan term. Our default procedure and steps to recovering assets when defaulted can be found here

Tax

The interest we pay on your investment is paid gross; no tax is deducted at source by peer-to-peer lending platforms. If you are an individual you should declare any interest or gains to HM Revenue & Customs. Our Lenders are responsible for the payment of any tax due to them to HMRC. The amount of income tax payable is dependent on the individual circumstances and your marginal rate.


If you are in any doubt about your tax position you should speak to your accountant or make an appointment to speak to an adviser.