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IFISA, Europe and beyond

Posted by on in Peer-to-Peer Lending

It’s a fascinating time to be in Peer to Peer Lending - as an investor, borrower or platform manager.

As noise in the sector increases in the April 6th build up to the Innovative Finance ISA (IFISA), here is an update on Madiston LendLoanInvest's position on the IFISA and our plans for the future.

The Innovative Finance ISA

The first step to being able to offer our investors Peer to Peer loans in the IFISA wrapper, is getting our “Full Permissions” from the Financial Conduct Authority (FCA). Like all Peer to Peer Lending platforms established before the FCA took on the regulation of the industry, we have “Interim Permission” and in October 2015 we were allowed to apply for Full Permission. This, we understand, may take some time to come through as the FCA has a huge workload to process all the applications. So, the IFISA is not lining up to be an April 6th “gunshot start” but a gradual process where IFISA opportunities like ours will emerge over a period of time with many years of benefit ahead.

Right now, we are preparing ourselves and our product and we are keen to bring this opportunity for Peer to Peer Lending in a tax-free wrapper to you as soon as we can. Remember for Peer to Peer Lending, there is now a tax-free amount of £1,000 in interest earned in a year for basic rate payers (£500 for higher tax rate payers).

Site Upgrade

Judging by market feedback, Madiston has one of the most comprehensive Peer to Peer Lending software platforms which, as you know, we make available for use by other firms (see Behind the scenes, major enhancements and new facilities have been made and very soon, Madiston LendLoanInvest will be upgraded to the latest version of the software. This will help us structure our IFISA offering and provide a simpler mechanism for our lenders and borrowers. This will be a comprehensive and important upgrade to our business model, processes and branding.

Opportunities in Europe

Whatever the UK’s decision on whether we remain in or leave the Europe Union on 23 June 2016, we believe the Peer to Peer Lending industry will continue to expand across Europe. With the UK leading the way in terms of regulation of the industry, we anticipate there will be growing cross-border opportunity. We aim to work with companies like our joint venture partner, FinBee in Lithuania, to explore these opportunities further for our UK lenders and borrowers.

…and the rest of the World

With many enquiries for our software platform from across the world, Peer to Peer Lending is clearly gathering momentum globally. Our latest software client (details to be announced in due course) will be launching in yet another emerging area for Peer to Peer Lending.

Peer to Peer Finance Association (P2PFA)

The size of our loan book and the presence of our software division, meant that we were unable to renew our membership of the P2PFA this year. We joined the P2PFA before we launched Madiston LendLoanInvest to demonstrate our commitment to high standards. We continue to run our business on those principles and according to the Financial Conduct Authority’s industry regulation. Even outside the P2PFA, we will be helping to shape the future of the industry globally.

There is much to do to deliver our plans but we look forward to bringing you more news as soon as we’re able to report it. If you have any questions on any of the above, please do get in touch with us, we will be pleased to hear from you.

Recent Comments - Show all comments
  • neiljf
    neiljf says #
    When's your ISA coming?
    Hi Sally, I hope you're well? Neil here from P2P ratings agency 4thWay. Could you have a stab of a guess at answering the questio
  • SAadmsally
    SAadmsally says #
    RE:When's your ISA coming?
    Hi Neil Good to hear from you. We are still in the process of obtaining our Full Permissions from the FCA so difficult to say whe
  • neiljf
    neiljf says #
    RE:RE:When's your ISA coming?
    Thanks for the update, Sally! I know that it's a bit of a headache going through all the hoops - or even trying to get the FCA to

For lenders, investors and savers in 2016

Posted by on in Finance

With a financial roller coaster start to 2016, there have been a number of articles across the internet providing ideas to maximise your finances this year, including news from the world of Peer to Peer Lending. Without recommending any, but sharing for your interest, here are a few we’ve come across since the beginning of the year:

From The Guardian, information about the new Innovative Finance ISA and even renting your spare room:

For those watching their savings dwindle, the BBC explains why Mark Carney insists there is no immediate need to raise interest rates:

But if you are increasing your earnings in the “sharing economy” (that includes Peer to Peer Lending) CityAM has some words of warning! Remember for Peer to Peer Lending, there is now a tax-free amount of £1,000 in interest earned in a year (for basic rate payers, £500 for higher tax rate payers).

So what about deducting tax at source? Here’s AltFi’s update on HMRC’s position on Peer to Peer Lending platforms deducting tax from lenders’ interest payments.

The Telegraph suggests that some people may consider taking action before possible changes are made to pension relief in the next Budget:

As we stride forward in 2016, we are awash with information to help us build our finances and, despite the market mayhem, we know the world is changing, financial services are changing and there is a wealth of opportunity ahead.

From Black Friday to Blue Monday

Posted by on in Finance

So just a few weeks into 2016 and, for many of us, New Year Resolutions have gone the same way as last year’s and the year’s before. This week we’ve had Blue Monday too which apparently is when we all wake up to our credit card bills regretting the cost of the spending spree on Black Friday…well, time to forget all that and focus on the positive!

2016 is still young enough to make it what you want it to be. If you have a financial goal, there is still more than 11 months to make a positive difference to your current position. We have read with interest some of the myriad of articles offering guidance on improving your finances so take a look and see if some of these might help you achieve your goals:

Let’s start with reducing costs and debts.

This is money published an article which had some interesting tips on saving money on everyday items. They suggested doing a blind “Taste Test” on some of the branded/non-branded items that are regularly in your shopping basket. This sounds like good fun to do - would your family prefer the most expensive or (hopefully!), the cheaper options?

Mentioned in the comments on that article was the 365 Day Penny Challenge which could be an achievable goal and a fun way to save without feeling the pinch. The idea is that on Day 1, you save 1p, then Day 2 save 2p and follow that principle adding 1p to each day until Day 365 when you’re putting away £3.65. At the end of that year you will have saved £667.95. Or its always possible to do the reverse - save £3.65 on Day 1 and reduce it each day – achieves the same goal! Here’s SkintDad’s version:

Martin Lewis is renowned for his money saving tips and Money Saving Expert has piled in with a Masterclass on cutting the cost of all debts. Maybe debt consolidation or one of the other ideas could help you achieve your 2016 goals:

Citizens Advice are another useful source of information on how to spend less. Take a look at their ideas: from how to cut down on the cost of going out - to saving money by growing your own vegetables!

Where Black Friday and the cost of Christmas has really dented your finances, the StepChange Charity offers some useful advice and they are there to help, without charge. They have a 7 Days 7 Ways series of emails written by expert debt advisors to offer you practical advice to take control of your finances in 2016. Find out more here:

So, all the best with achieving your financial goals in 2016 – there’s still time to make a big, positive difference.

As we discovered at LendIt Europe 2015, Peer to Peer Lending has penetrated only 0.1% of the addressable market in Continental Europe with growth accelerating at some 200%. Tackling regulation across the region has been holding things up but this is changing and Liberum research predicts that by 2020 Continental Europe may overtake the UK despite being 3x times smaller than the UK market now. A good time to announce our joint venture with Lithuanian P2P lending service, FinBee, who launched successfully in August 2015 using Madiston’s software platform.

The FinBee site models the latest version of our own site, Madiston LendLoanInvest for personal loans, which offers UK investors and borrowers greater flexibility and control so they can customise lending and borrowing to suit their personal needs. FinBee replicates this service for Lithuanian borrowers and lenders on its site.

Our CEO Tim Simon was pleased to support the innovative start up company: “The Lithuanian market is ready for P2P lending, with a wealth of investors prepared to lend to a growing pool of borrowers. Our technology, with its multi-currency and multi-lingual facilities, will help FinBee as it grows in Lithuania and neighbouring countries. ”

FinBee’s CEO, Laimonas Noreika comments on the launch: “FinBee aims to be the most cost effective and easiest peer to peer lending platform in Lithuania. We started the company from scratch so we welcomed the opportunity to work with the Madiston team who have given us the technological edge.”

FinBee joined Madiston at this year’s LendIt Europe 2015 conference, along with the FinBee mascot!

Picture from left to right:
Mark Crocker and Tim Simon, Madiston, Darius Noreika and Laimonas Noreika, FinBee – and Bee

LendIt Europe 2015 - Quick summary

Posted by on in Peer-to-Peer Lending

Themes at LendIt Europe 2015 included diversity in lending funds and the rise of Peer to Peer Lending in Europe. Exciting news from Funding Circle as Samir Desai, CEO, revealed in his keynote speech that they were launching in 3 new countries – Germany, Spain and Netherlands – following the acquisition of Zencap. This very nearly overshadowed our own announcement of a joint venture in Lithuania with new peer to peer lender, FinBee, who launched their consumer loans business on the Madiston software platform!

Continental Europe

Cormac Leech of Liberum, told us that despite the incredible growth in the sector it was still less than 2% of the addressable market in the UK & US. As our announcements seem to indicate, Europe (excluding UK) is another growth opportunity with, according to Cormac, only 0.1% of the addressable market penetrated so far and growth accelerating at some 200%. Tackling regulation in Continental Europe has been holding things up but this is changing and Cormac predicts that by 2020 Continental Europe may overtake the UK despite being 3x times smaller than the UK market now. Huge opportunities in all these markets!

Peer to Peer What?

Another interesting point made by Cormac was that the growth in the UK was not as a result of increased awareness in the sector but instead deeper penetration of the same early adopters. In other words, the same people are putting more money into peer to peer lending. So the challenge and the opportunity remains in increasing awareness in the general public.

Can the industry cope with a recession?

Looking at credit card loans, Cormac demonstrated that in the UK average net yields, net of loan losses, was 6.4% and over 16 years of data, there were no years with a negative return. This shows resilience but much was talked about during the conference about us being “closer to the next recession, than the last”. So if we’re in a very benign environment at the moment, what happens if/when that changes? Cormac’s view was that UK consumer and SME net yields, like the credit card loan data, would not go below zero. Of course, Zopa, the only platform that’s been around long enough to go through a credit cycle, proved to be very resilient in the global financial crisis in 2008.

Could P2P get swallowed up by the system?

This is a question posed by Thin Cats CEO, Kevin Caley. With increasing interest from the institutions will P2P platforms abandon their retail investor roots, get absorbed by the system and disappear? No, was the overwhelming response from the platforms. Indeed the P2P Finance Association have changed their rules to ensure there is no discrimination on their members’ platforms between retail and institutional investors. No “cherry picking” for those with more to invest! Across the 2 days of LendIt Europe, a number of platforms acknowledged that institutional money would enable faster growth but a diverse range of investors was the best route to take. So the industry will remain true to its roots and will continue to welcome retail investors. Perhaps none more determined than Ratesetter.

Government and regulation

With the Peer to Peer Lending “landing slot” coming to a close for FCA full permission, it was encouraging to hear Chris Woolard from the FCA and Harriet Baldwin MP, Economic Secretary to the Treasury, both confirming their commitment to supporting the Peer to Peer lending industry for its innovation and its ability to provide more choice for consumers in financial services. Chris compared the role of the regulator to that of a structural engineer – making sure the foundations are secure. They were looking to ensure that the customer experience in P2P Lending was good, there was integrity across the industry and it was working for the economy. With that in mind, they were looking to strike the right balance between tough regulation and allowing the industry to grow, promoting competition in the interest of consumers. Harriet Baldwin MP highlighted the Government’s desire to make the UK the Global Hub for Fintech and cited proportionate regulation, new bad debt relief legislation and the Innovative Finance ISA as ways they were showing their support for the industry. She concluded that it was a sector they wanted to see succeed.

Fireside Chats

Steve Bateman of Santander determined that marketplace lending was here to stay and indeed offered banks a way of serving their customers better or serving customers that they couldn’t otherwise help. He felt that banks generally were either waiting to see how things would evolve or, like Santander, becoming first movers seeing the industry as an opportunity rather than a threat.

Peter Wilson of British Business Bank said that when small businesses struggled to get finance, there was a desire in government to drive finance to them. They were able to do this by lending through P2P platforms who were able to evidence their track record and pass the selection criteria. Further initiatives were being pursued to encourage banks to share credit reference information and to refer borrowers to alternative lenders when they are declined.

P2PFA Summit

The P2PFA Summit covered a lot of ground, not least with the presentations from Chris Woolard, FCA and Harriet Baldwin MP, but also shared the views of platform providers and “real people” lending and borrowing on those platforms. The overwhelming feeling was one of optimism, good service and awareness of the risks. Christine Farnish, Independent Chair of the P2PFA, outlined the new rules for members that helped increase clarity by standardising on arrears and default reporting; showing returns net of default and fees; and maintaining parity between their institutional and retail investors. These ideas are supported by the team at Madiston LendLoanInvest.

And so much more…
There was much to see and hear at LendIt Europe 2015 and the P2PFA Summit which we couldn’t cover in this brief summary (we may update this with thoughts on presentations attended by other colleagues as we gather them so watch this space!) but all well worth noting so visit the LendIt Europe 2015 website to see a roundup of the news and great videos of the presentations.  

Thank you to the LendIt team and the P2P Finance Association.

A new “Innovative Finance ISA” (IFISA) putting peer to peer lending in a tax-free environment for ISA savers has been announced by HM Treasury and should be available from 6 April 2016. This is a huge boost that will benefit lenders directly and may provide a knock-on benefit to peer to peer borrowers too with potentially more funds available to borrow.

The thinking behind the government’s original decision to add peer to peer loans to the list of ISA qualifying investments was to increase the choice available to ISA investors, encourage the growth of peer to peer lending industry and improve competition in the banking sector. The latest announcement was made following their public consultation on how to achieve this in practice.

So what else does the consultation tell us?

  • Draft legislation will be published for review later this year to ensure all is ready for the new financial year.
  • Platforms may have extensive set-up costs to extend their technology, ensure compliance, recruit new staff and provide adequate training but the hope is this will not present a barrier to those wishing to participate.
  • Advising on peer to peer loans will be a regulated activity but firms already authorised to give advice on investments can elect to extend that to peer to peer lending investments too.
  • The government feel it is not necessary to include peer to peer lending in the Financial Services Compensation Scheme (FSCS) right now but they’ll consider this again in 2016.
  • Platforms will be able to become ISA managers but, as now, the peer to peer loan agreements will remain directly between lender and borrower.
  • The process of withdrawals will be different in the IFISA because it is not always possible to re-sell peer to peer loan parts held in an ISA wrapper within 30 days as is required in Cash or Stocks & Shares ISAs. Those platforms with secondary markets may be able to achieve this but only cash held in the IFISA will have the 30 day deadline for withdrawal.
  • Likewise, the government has decided peer-to-peer loans held within IFISAs do not need to be transferable because the process of doing so may negate any benefit to the consumer. Cash held within the IFISA will be transferrable within the specified time period of 30 days.

Which all adds up to why we have the third ISA – it will operate differently from Cash or Stocks & Shares ISA. By providing a third ISA, the Innovative Finance ISA, those differences can be clearly explained to ISA savers. The name suggests that other financial innovations may become eligible for inclusion too.

Here’s a link to the HM Treasury document: ISA qualifying investments: response to the consultation on including peer-to-peer loans if you’d like to read in full.

Peer to Peer Lending: Borrower Case Study

Posted by on in Borrowing

Geoff's story, borrowing on Madiston LendLoanInvest to clear credit card debt...

Borrower profile:

Geoff, 64, and a retired former financial advisor from Derbyshire, found himself looking at alternative loan options when he realised his credit cards had reached quite substantial levels. He was paying up to 25 per cent in interest rates on some of his debts. Geoff did have investments and assets that he could have sold to pay off these credit card debts, but opted against taking this route.

Why peer to peer lending?

In April 2014, Geoff started to look for ways he could consolidate his debt and lower his repayments. His online application to the bank for a lower interest rate loan was declined, so he turned to the Chancellor’s Budget speech for some inspiration. When he discovered that peer-to-peer lending was going to be included in ISAs in the future, Geoff decided to research further into this alternative way of borrowing money.

“Peer-to-peer lending was something I hadn’t really considered until it was mentioned during the budget, so I thought I’d take a look and see what all the fuss was about. I have to say that a good many of the peer-to-peer lending websites I came across seemed cold and difficult to use. However, I was really impressed with Madiston LendLoanInvest’s website – I found all the information I needed quickly on how to apply for my loans and it was really easy to set these up. I was extremely confident to arrange my loan myself and had my loan request fulfilled within the agreed time.”

How much and for how long?

Geoff arranged two loans through Madiston LendLoanInvest, one for £3,520 over five years at an interest rate of 8.27% and a subsequent one for £1,400 at an interest rate of 9.45%. Both of these loans helped Geoff pay off two of his biggest credit card debts. Madiston LendLoanInvest puts investors and borrowers in control of loans they arrange, allowing them a good level of flexibility and to work together across the platform to customise a loan to suit their personal needs. On this occasion, around 30 investors lent Geoff enough money to cover both loans, all agreeing interest rates that suited both the investors and Geoff.

A positive experience

“It’s easy to build up a huge credit card debt, especially when credit card companies are ripping off consumers with high interest rates, some as much as 25 per cent. If any of my friends found themselves in a similar situation I would definitely recommend that they look at arranging a peer-to-peer loan to ease their repayments; it was such a relief to pay off my credit card debts. The team at Madiston LendLoanInvest were supportive and helpful when I was arranging my loans and made the process straight forward and stress free.”

As the industry celebrated its 10th birthday in March 2015, the team at Madiston LendLoanInvest (MLLI) gazed further into the Peer to Peer Lending (P2PL) crystal ball with a look at its own top 10 opportunities for lenders and borrowers in the next 10 years.

First we salute Zopa, the founders of our industry. It is from their early innovations that an amazing new force in financial services has been triggered, perhaps one of the most seismic “disruptions” of our generation. Change has begun, now we need to maximise the industry’s potential for lenders and borrowers.

Important note: This is a light-hearted look into the future of Peer to Peer Lending. Lenders and borrowers should always research and consider their options, taking advice where appropriate. Lenders, your capital may be at risk when investing in Peer to Peer Lending.

So our top 10 opportunities in the next 10 years (in no particular order!) are:

  1. Lending ISA

    Signs are good for an Individual Savings Account that includes peer to peer loans (alongside existing cash and Stocks/Shares ISAs). “Political will” remains but the election may get in the way of any legislation needed so perhaps not available until the end 2015/early 2016.

    For lenders: a tax-free environment for their P2PL earnings
    For borrowers: likely to attract more lenders, so more funds would be available to borrow

  2. Bad debt relief and new Personal Savings Allowance (PSA)

    To-date lenders have not been able to offset their P2PL losses against their P2PL income but this is changing. From April 2016, individuals will be able to make a claim, through Self-Assessment, for relief on losses incurred from April 2015. This, coupled with the new Personal Savings Allowance announced in the recent budget where the first £1000 of income is tax free for basic rate taxpayers, and the first £500 for higher rate taxpayers, is great news.

    For lenders: tax will only be due on net gains and PSA means first £1000 is tax-free
    For borrowers: could bad debt relief attract lenders to wider credit categories of borrower?

  3. Mobile market

    Huge growth is forecast in the use of mobile phones/tablets to manage our finances. Lenders and borrowers could soon do all their transactions via mobile app (MLLI app coming soon!)

    For lenders: research opportunities and manage your account, wherever and whenever
    For borrowers: potentially apply for P2P loans at the point of purchase, through a mobile app

  4. Retail engagement

    Google in the US, Alibaba in China, big businesses are now getting involved in P2PL to help their consumer and business customers. We think smaller retail businesses may want to help their prospects become customers with a little help from P2PL…

    For lenders: could open access to a greater number of creditworthy borrowers
    For borrowers: perhaps more borrowers will become aware of peer to peer loans

  5. Pension freedom

    From 6 April 2015, over 55s can take as much of their defined contribution pension pots as they wish, and 25% of the amount taken is tax-free.

    For lenders: for those thinking of a diversified portfolio, P2PL is one to research and consider
    For borrowers: potentially a new stream of funds available through P2PL


    It is also possible that the legislative changes needed to make P2PL an eligible investment for ISAs, will open the door for P2P loans to be qualifying investments for SIPPS/SSAS.

    For lenders: could offer middle ground between high risk stocks & shares and low risk cash
    For borrowers: potentially another new stream of funds available for borrowing

  7. Taxed at source

    Sometime soon, P2P lending platforms may be asked to deduct tax on P2PL earnings

    For lenders: helps individuals pay their tax without having to file Self-Assessment
    For borrowers: perhaps this will encourage more lenders to participate in P2PL

  8. Institutional involvement

    Professional investors increasingly interested in P2PL. Good P2PL platforms have worked hard to grasp this opportunity and still maintain a level playing field for small private lenders

    For lenders: maybe more opportunities to invest on equal terms alongside the big players
    For borrowers: more lending funds may mean loans fill faster at competitive interest rates

  9. European markets

    As members of P2PFA we have been looking at/helping shape the approach of European regulators, with the UK leading the way.

    For lenders: potentially more opportunities available in cross-border transactions
    For borrowers: may open up a larger lending market looking for diverse range of borrowers

  10. Interest rate freedom

    No interest rate increases are predicted until 2016 so P2PL may offer benefits in short-medium term anyway but what happens when the Bank of England increases interest rates?

    For lenders and borrowers: Open market pricing on MLLI loans means individuals can decide their own rates: borrowers set a rate to attract lenders, lenders choose to bid or counter-bid.

We hope you enjoyed our top 10. If you are considering lending or borrowing through P2PL, make sure you understand the costs associated, potential benefits and risks before you start. Remember, like other investments, your capital may be at risk if you lend through P2PL.

Better interest rates, knowing money is protected by a provision fund, being able to choose how much and for how long you lend, ease of use of the peer to peer lending model are just some of the things that were important to Peer to Peer Consumer lenders surveyed for the Nesta Report: Understanding Alternative Finance 2014.

Over 4,000 lenders were surveyed, most of whom had joined recently, with 34% in the last year alone.

Clearly their experience has been a positive one with:

  • 92% saying they would recommend P2P consumer lending to people they know with money to lend and
  • 65% of them are likely to recommend the model to people they know looking to borrow money

In terms of size and shape of the lending, 54% lent more than £5,000 with the average lender's portfolio at £5606.

The Nesta Report statistics showed that 77% of lenders were men and the average age was 49. The income bracket of lenders was interesting too, with 37% of lenders earning less than £25,000 per annum and only 25% earning more than £50,000 per annum. This shows the breadth of appeal of peer to peer lending for those searching for better interest rates on their savings.

The report acknowledges that P2P consumer lending has evolved to become an important force in the UK consumer credit and lending space. It is expected to grow to £547 million by the end of 2014 with nearly 100% year-on-year growth.

Lenders, borrowers and all involved in the industry and looking forward to 2015 with confidence as progress continues to be made. Just recently in the Chancellor's 2014 Autumn Statement it was announced that individuals lending through P2P platforms would be able to offset any P2P losses against their P2P income. This will be effective from April 2016 allowing individuals to make a claim for relief on losses incurred from April 2015, good news for lenders.

The government also announced its intention to review financial regulation which currently stands in the way of institutional lending through P2P platforms, opening up Peer to Peer Lending to a new market.

And just last week, the consultation period ended which set out proposals to change ISA rules to allow peer-to-peer loans to be held within them. Our view was that a third "Lending ISA" would be the best option which we hope will be introduced in 2015. The Nesta Report shows that 64% of the lenders surveyed would lend more should P2PL qualify for ISA scheme.

All this will catapult Peer to Peer Lending towards the £45billion industry that some industry commentators expect it to be within the next ten years. Exciting times.

Better interest rate, ease of use of Peer to Peer lending model, flexible terms (early repayment), transparency, speed, more control ...were just some of the important reasons that borrowers chose peer to peer lending over bank loans. These were the findings of the Nesta report: Understanding Alternative Finance 2014 who surveyed 6,392 borrowers in their research.

More than half of borrowers surveyed for the P2P Consumer Lending part of the report had been offered a loan from a bank but chose to go with P2P Lending. The findings also show that 3 in 4 borrowers would approach P2P consumer lending first in the future, demonstrating a very high level of borrower satisfaction in the process.


If you're thinking of taking out an unsecured personal loan, here are some of the other interesting stats from the report:

  • Its new and growing - most of the borrowers found peer to peer lending within the last 2 years, 32% within the last 12 months
  • The average amount borrowed was £5,471 mainly by A or A* credit rated people (prime and super-prime categories)
  • The 3 main reasons for borrowing were: to purchase a vehicle (46%); home improvement (26%); consolidating debt (25%)
  • It was mainly men with an average age of 42 who borrowed through peer to peer lending with 25% earning less than £25,000 and 18% earning over £50,000
  • Some 2-3% are sole traders borrowing for their business

The report concludes that P2P consumer lending has evolved to become an important force in the UK consumer credit and lending space. The industry is expected to grow to £547 million by the end of 2014 with nearly 100% year-on-year growth.

If better interest rate, ease of use, flexible terms (early repayment), transparency, speed, more control are all important to you too when considering taking out a loan, perhaps you should investigate Peer to Peer Lending.

The Nesta report is the largest study of the UK alternative finance industry to date and is an excellent piece of work. You can see the full report here:

Snapshot of LendIt Europe 2014

Posted by on in Peer-to-Peer Lending

Some 450 attendees filled the conference hall at LendIt Europe 2014 in London with several exhibitors representing Peer to Peer Lending (P2PL) platforms, financial institutions, software providers and data specialists. The day began at 8am with breakfast and networking and a packed agenda followed, which covered everything from latest trends to the state of P2P Lending in Continental Europe.

Consolidation and Compromise with the Old and the New

After Opening Remarks from organiser Peter Renton from Lend Academy, Rhydian Lewis of Ratesetter, was the first Keynote speaker drawing parallels between the French Revolution and the disruption in the financial services market. Rhydian pointed out that inevitably traditional financial institutions would fight back against the tide of change so, instead of conflict, it was consolidation and compromise that should be encouraged as the old and new guard compete for the mass market.

An over-arching theme throughout the day was how the old and new would work together. This was coupled with the commitment from P2P Lenders that retail investors would stay at the heart of their operations. Cormac Leech of investment bankers, Liberum, talked about this disruption in banking services being one of the biggest events hitting them in their history. He described banks as bloated, facing this new leaner competition operating with 60% lower costs.

So how will traditional institutions respond to P2PL?

It was encouraging to see that Nigel Morris of QED Investors, shared our view that banks are now looking at P2PL and deciding how to deal with it. Nigel anticipates that they are building innovation teams internally, looking at acquiring innovators or looking to partner with existing P2PL where the synergies work well.

The panel of institutional investors already participating in P2PL were looking to the next opportunity. They had similar views on yields with 5-12% deemed attractive, supported by a good management team whose objectives were aligned with the investors.

Huge growth already ignited will be fuelled by ISA

Cormac painted the picture that, when peer to peer loans were incorporated in an ISA wrapper (potentially 2015) with the added benefit of a tax-free environment, the peer to peer lending industry would enjoy something that was currently lacking - awareness and proper participation from the lending community. Right now, only 35% knew about P2PL, only 10% had considered investing and only 2% had invested. He predicted huge growth in those numbers when the peer to peer loan ISA becomes available.

The future of Peer to Peer Lending in the UK...

Cormac felt the strength in P2PL was its transparency, a key differentiator. Samir Desai of Funding Circle reiterated that, by publishing their statistics, P2PFA platforms show their commitment to maintaining transparency and high standards. A view shared by Giles Andrews of Zopa.

Giles joined a panel of consumer P2P lenders each offering their own prediction of the future: more involvement by banks, partnering with big brands, greater diversity of P2P platforms. Likewise the panel of peer to peer Lenders targeting SME markets felt that there would be many different (even "surprising") participants in marketplace lending/P2PL over the next 12-18 months. Other key issues discussed were the tax regime, enabling lenders to offset losses against gains, stress-testing their loan books in anticipation of a further economic downturn, and the validity of valuations of P2P Lenders like Lending Club.

The "Next Generation" P2P Lending models focused on ideas in the mobile market, aircraft and even bitcoins so the future is certainly set to be diverse!

...and the position in Continental Europe

The Continental Europe panel felt that common regulation across borders was not likely in the short term. It was clear that the UK government were leading the way in their support of the industry, governments in other European countries were not so active or involved. All the speakers and panel members felt that the potential market was huge, with opportunities in new markets and new products. The key for the platforms was to maximise standardisation to achieve scale.

Nesta: Understanding Alternative Finance

Whilst drinks were being poured for delegates, Bryan Zhang from University of Cambridge summarised the recently published Nesta report "Understanding Alternative Finance", the largest study of the UK alternative finance industry to date. With a combination of data provided by peer to peer platforms and surveys conducted with lenders and borrowers, the report showed customer satisfaction was high and growth in this market will continue apace.

Our next blog will focus on this comprehensive report, so more to follow!

What does all this mean for us and our lenders?

The fact that...More financial institutions are getting involved in P2PL means that... there will be more opportunity for everyone, with retail and institutional lenders sitting alongside each other. In addition to manual bidding, Madiston LendLoanInvest's unique tools give granular control on automated lending for retail lenders through lending portfolios or institutions via an API (system interface).

The fact that...Banks are looking for joint ventures or new software means that...Madiston can provide solutions through our configurable P2PL software platform.

The fact that...the top three things that were important to lenders when making decisions to lend through P2P were:

1) Interest rate available (Lenders on Madiston LendLoanInvest have enjoyed an average yield of 8.5% after fees, annualised and assuming that our compensation scheme covers any borrower defaults)

2) Knowing my money is protected by a provision (we have a Compensation Scheme)

3) I can choose how much to lend and for how long (our lenders can choose how much, how long and even choose which loans; they can do this manually or automatically; our Secondary Market is coming and there is much more in the pipeline. Already good, soon brilliant! Watch this space...)

Means that its good news all round.

The Peer to Peer Lending (P2PL) industry has been boosted by the launch of the HM Treasury consultation on the new peer-to-peer lending ISA. It asks questions designed to find the best way to bring peer-to-peer loans within the scope of ISA qualifying investments and, as an open consultation, is looking for answers from all interested parties. With four weeks left to consider the options, we have provided a link to the consultation document at the bottom of this article in case you'd like to take a look.

One of the questions asked in consultation document is whether there should be a third ISA dedicated to peer to peer loans. This would sit alongside the existing Cash ISA and the Stocks & Shares ISA, rather than be incorporated within the Stocks & Shares ISA. We think the third ISA is the neatest option.

P2P lending is fast becoming a popular alternative funding option for both consumers and businesses but many people will be new to peer to peer lending so it is important to explain clearly the opportunities and the differences. A peer to peer loan ISA will offer a huge opportunity for savers with enhanced interest rates available in a tax-free environment. Looking at the risk spectrum, the peer to peer loans ISA will sit neatly between the low-risk Cash ISA and the higher-risk Stocks & Shares ISA.

This third peer to peer loan ISAs will be different from the other two ISAs in the way savers' funds are held by ISA Managers and how savings can be withdrawn. A separate peer to peer loans ISA will enable clear distinctions to be drawn and also give maximum choice to savers about how much of their £15,000 annual limit they allocate to each type of ISA investment.

The consultation period concludes on 12 December at which point the feedback will be assessed, conclusions drawn and timescales for implementation determined.

With some £2 billion successfully loaned so far through P2P platforms, industry experts have no doubt that the inclusion of peer to peer loans within the ISA will be a huge turning point for the industry. Current predictions expect that P2P lending will be a £45bn market within the decade as a result – excellent news for P2P lenders, savers and borrowers alike.

Link to consultation paper: HM Treasury ISA qualifying investments consultation on including peer to peer loans

Thirty years ago most of us contributed diligently to our pension, confident that upon retirement we would reach the level of income to live the dream. Fast forward to 2014 and the dream has become a potential nightmare.

Millions of pensioners have seen their savings savaged by the financial crisis and then dwindled further by record low interest rates that look set to stay. Many people are now discovering that they have lost thousands of pounds (7p in every £1) because they weren’t encouraged to shop around for better pension annuity opportunities when they retired.

…and those approaching retirement have been nervously watching on.

Recent pension reforms, including those announced in the Queen’s speech, aim to give people approaching retirement the opportunity to choose how they build their income over their retirement.

“Choice” is the key here, something that Madiston LendLoanInvest is all about!! So savers and pensioners can choose where to put their money to deliver the outcome in retirement that they choose!!

Savings accounts and Cash ISAs are a choice to yield a safe but unexciting return. Stocks & Shares can certainly be more exciting, but somewhere in the middle sits Peer to Peer Lending. The positioning of risk versus reward has financial commentators talking about a “huge flow of money into Peer to Peer Lending” triggered by the recent pension reforms giving over-55s access to their pension pots.

So our relatively new industry, already a financial services innovation, is working together to deliver Peer to Peer Lending in new ways. Members of the P2P Finance Association, like ourselves, are looking to define the best way to enable peer to peer loans to be included in the New ISA.

Real People, Real Benefits

Posted by on in Peer-to-Peer Lending

This loan for a creditworthy borrower (arranged on our peer to peer lending site last week) sums up the win:win that peer to peer lending can offer:

  • Lenders, ordinary people like you and me, bid on this loan which totalled just over £3,500.  Some offered £10 others put in bids up to £250 a time.  The interest rate they asked for (and got) ranged between 7% and 9.5%.  As savers, they achieved their aims with this loan.
  • With the help of those lenders’, the creditworthy borrower was able to pay off a credit card bill that was charging over 25%, saving them some 60% in interest costs.  They achieved their aims with this loan.

All we do is make it happen. 

We have two similar “debt consolidation” loan requests on the site at the moment, take a look and see if it might help you achieve your aims.

If you’d like to know more about peer to peer lending or Madiston LendLoanInvest, please do get in touch, via email, phone or LiveHelp on the site.

FYE 2015 kicks off with fantastic news in the Budget in support of P2P lending (read our blog about the Budget news), plus new regulations from the FCA that will bring greater control to the industry(read our blog about what FCA regulation means to you), Madiston LendLoanInvest’s new loyalty scheme will deliver even more value to both lenders and borrowers.  Here’s how it works:

PAID (Participation Awards & Incentive Drive) is an award system that will reward members with points that can either be withdrawn as cash or used on the site to make a repayment on a loan, lend to other members or buy a membership. 

1 point equals 10p or 10 points equal £1

Members who participate in a number of activities including, registering on the site, recommending a new user, voting on a poll and posting on the forum will receive between two and 20 points for each. This increases to 50 points for members who have a testimonial, video or article published, or who accurately report a software bug on the site. For lending and borrowing, points awarded are worth one per cent of the amount lent or borrowed.

This means in effect:

LENDERS EARN a further 1.5 per cent interest and BORROWERS pay 1 per cent LESS interest.

The PAID scheme is now LIVE on the site, so make sure you make the most of your finances in this financial year. If you’re not already registered, sign up now and start earning with PAID! 

Firstly, we set out to make Madiston LendLoanInvest (MLLI) a fair and secure platform for peer to peer (P2P) lending. From the outset we wanted to show that we had the checks and balances needed to run a safe platform, so we joined the Peer to Peer Finance Association (P2PFA), while planning our launch. The P2PFA had already established high standards for the industry and continue to do so. Membership of the P2PFA means we are active in the regulation, innovation and generally the development of this exciting industry.

Protecting lenders and borrowers is a primary aim for all parties: the Financial Conduct Authority (FCA), the P2PFA and P2P platform providers. FCA regulation benefits us all, protecting us from new entrants wishing to ride a growing market without putting the necessary checks and technology in place.

The FCA's stated objectives are that consumers can be confident that they:

  • receive clear information on products and services, and such are delivered as expected
  • are treated fairly, kept informed and given a good level of service
  • will not face barriers to changing things, making a claim or a complaint

Christopher Woolard, Director of Policy, Risk and Research at the FCA said "... the rules provide consumer protection, whilst allowing ... access to this innovative method of funding".

So here are some questions and answers highlighting some key aspects of the FCA regulatory approach:

Will the money I've lent out be covered under the Financial Services Compensation Scheme (FSCS)?
No, the FCA considered including P2P Lending in the FSCS but decided it wasn't justified at this time. There is, of course, a heavy cost associated with the FSCS. The FCA has stated that they will keep this under review. MLLI operates a compensation scheme though, to help protect lenders against late loan repayments and defaults.

Will the money in my MLLI holding account be covered under the FSCS?
Yes, the regulation requires that clients' money is kept segregated from the company's own funds. Which means that it is sitting in a bank account which is therefore covered by FSCS. MLLI also passes on the interest earned in that bank account to the lenders, so that helps too.

Do I have to be a sophisticated investor to participate in P2P Lending?
Not on the MLLI site. The FCA did look at this but has concluded that P2P Lending is in the lower risk category and therefore should be available to all types of savers, whether you have £10 to invest or £millions.

We've seen how Peer-to-Peer Lending has benefited savers but what if it goes wrong?
FCA rules state there should be a process for complaints, turning first to the firm itself and then, if relevant, to the Financial Ombudsman Service. Our aim is to deliver nothing but positive experiences though!

How will the FCA know what's happening in the P2P Lending firms?
The FCA are implementing regular reporting requirements including details on firms' financial position, loan book and complaints. So you can rest assured that they're monitoring while you're earning.

Will I be protected if the platform provider goes bust?
The FCA has this covered from two angles: Firstly, there is a finance resource requirement which means providers have to hold a minimum of £20,000 or a percentage of their loan book for larger firms, so they can withstand any future financial shocks. The FCA also determined that firms must have arrangements in place to ensure that loans continue to be administered if the firm running the platform goes out of business. (NB the loan contracts are direct between lender and borrower). This contingency plan was already a requirement on P2PFA members like us.

Early indications look like FCA have got the regulation about right: enough to protect investors and borrowers, whilst encouraging this important new industry to grow.

A 2014 Budget for “Makers, Doers and Savers” was announced by George Osborne today.  Savers certainly needed some good news with interest rates predicted to stay low for some time to come!
Clearly, from our point of view, the best part of that good news is that Peer-to-Peer Lending is to be included in the New ISA (NISA), with a £15,000 annual investment limit.  The New ISA replaces the individual Cash ISA and Stocks & Shares ISA, giving savers the opportunity to invest the £15,000 as they wish….cash, stocks & shares and peer-to-peer loans.
What does this mean for savers?  The higher interest that you earn through Peer-to-Peer Lending can be done in a tax-free environment…double joy.
The message from The Treasury is clear: they are behind the Peer-to-Peer Finance industry, they see it as adding competition to the traditional financial services, benefiting the economy and are seeking ways to ensure that its benefits are brought to the attention of the general public.
What’s more…they also announced that they are entering a new consultation on legislating to help match SMEs who are turned down for a loan, with alternative lenders.  Their aim is to broaden the sources of finance available to small businesses.
So what’s next?  Well, we’ve seen momentum building in the Pension arena too today, with radical changes announced in the Budget, cutting out the requirement to buy an annuity.  We believe there will be room for more change later: P2P lending as an investment option in SIPPS and SSAS’s adding greater value to pensions and savings.  
The challenge to date has been in ensuring that the technology handles the complexity. We had this in mind when we built our platform and so it already has the flexibility to implement pension controls.   And, when the time is right, we’re ready for the call from progressive pension managers!  
The reach of P2P lending is extending rapidly, an exciting prospect for all of us working in this industry.
Follow us on social media, sign up for our newsletter or register as a lender or borrower now.

Good to be part of the Inaugural Peer-to-Peer Finance Association Conference

Yesterday a crowd gathered in London for the first Annual Conference of the Peer-to-Peer Finance Association hosted by PwC.  Industry leaders, politicians, regulators, journalists, lenders and borrowers were among the audience as Christine Farnish, Independent Chair of P2PFA, set the scene with charts showing the “hockey stick” growth of P2P Lending since 2010 with over £1bn now lent through P2P Lending platforms in the UK.

Sajid Javid MP, Financial Secretary to the Treasury
Christine then introduced the Keynote speaker, Sajid Javid MP, Financial Secretary to the Treasury.  Competition was his theme and how important it was for the future of the financial sector.  Time to grab the opportunity of the alternative financial services revolution with P2P Lending leading the way.  Good to hear the support from the Treasury.

The Perfect Storm
Next up was Neil Blindoff, Strategy Partner at PwC who talked about “the perfect storm”, favourable conditions like restricted bank liquidity, low interest rates, negative attitude towards banks and a positive attitude to eCommerce, all combining to create the opportunity for P2P Lending.  Despite the rapid growth of the industry, there was still significant latent market potential (many £billions) in P2P Lending.  Consumer awareness was relatively very low so the superior pricing of P2P Lending for investors and borrowers (versus the big banks) was still to be discovered by the masses.  It was all to play for as the PwC crystal ball indicated increasing sector penetration and growth, consolidation resulting in smaller numbers of larger P2P platforms and a cautionary note on increasing pressures on margins.

Competition & Innovation
The Competition & Innovation panel comprised Sheldon Mills, Senior Director of Policy at the OFT, Fod Barnes, Senior Adviser at Oxera and Jonathan Moules, Enterprise Correspondent at the FT.  They discussed the ways in which regulation could apply new rules to match the new approach to finance; the healthy culture of innovation and entrepreneurship in financial services and in financial technology; and that the simple messages and direct people-to-people relationships were helping to overcome consumer inertia within financial services and getting people engaged at last!  Much could be achieved in the right regulatory environment and with the Government support the industry currently has. 

Real People with Real Experiences
A great section in the agenda was the Real People/Real Experiences panel.  A business lender, consumer lender, business borrower and consumer borrower told of their direct experiences of P2P Lending.  Perhaps the most heartening part of the discussion was that both sides of the equation, lenders and borrowers, felt that P2P Lending meant that they were helping other people.  The borrower noted that the lenders helped him to replace his expensive debts with a lower cost loan and, in turn, he was pleased that he was paying interest to grow the savings of the individuals who helped him.  Other positive comments included “human process”, easy, found the risk to be low and rewards high, quick and efficient.  The question was also asked about difficulties they’d experienced, and it seems they’d had none so far!  No one was suggesting there weren’t risks or that everyone had the same experience but certainly for this group, they’d do it again…and do!

Under the Bonnet – Some P2PFA Members
And so to a panel of some of our fellow P2PFA members for the “Under the Bonnet” discussion.  Interesting analysis of the methods used to credit check and verify borrowers’ reliability, different across business and personal lending providers.  Questions were asked about secondary markets, costing of risk and maintaining standards across the industry to ensure continuing credibility.

The Regulator
Finally, would the FCA reveal all in their “New Regulatory Framework” presentation?  Sadly no, David Geale, Head of Investment Policy said that the internal review processes were continuing and the final rules would be available in early March.  Given P2PFA members and the FCA share the same goals to enable the industry to flourish whilst protecting consumers and ensuring good practice, hopefully the rules will be as expected from the consultation process.

So, thank you to the P2PFA for an interesting agenda and a valuable opportunity to meet others in the industry.  We are pleased to be members of the P2PFA and look forward to helping out again at the next Annual Conference.


Madiston LendLoanInvest Infographic

Posted by on in Finance

We Take Your Security Seriously!

Posted by on in Security

SecurityWe wish to ensure that users may enjoy the benefits of this site confidently, knowing that their data and transactions are safe secure.
Therefore we have expended much effort to achieve this security.
We also have a zero tolerance to the small minority who wish to spoil it for the many.

Here are some of the many things that we have done to make your data and transactions secure:-

Extended Secure Sockets Layer
We have implemented Extended SSL - Secure Sockets Layer encryption from GlobalSign.


GlobalSignESSL                                         GlobalSignDetails

Our GlobalSign Certificate may be checked out by clicking on the GlobalSign badge on any of our web pages.

SecureLive Anti-Hacker System
We have also implemented the SecureLive Anti-Hacker protection system.


From their web site "SecureLive is based on four fundamental pillars of security; 
(1) Real-time continuous scanning to identify attacks at any time, 
(2) block those attacks utilizing a global intelligence base 
(3) alert designated IT staff, admins, website owners, etc. 
(4) case file construction and information gathering and submission to appropriate authority and agencies to stop and shut down your hackers."

The system is artificial intelligence capable and adjusts our security settings automatically to become smarter. SecureLive incorporates Software Bots, Artificial Intelligence Technology, Complete Covert Data Acquisition, Existing Global Hacking Knowledge-base, Live Human Intervention, Smart Real-Time Diagnostics and the Automation of SecureLive to pack four separate systems into one for a complete rounded solution to today's security threats; scanning, blocking, alerting and reporting.

For for more information go to .

Registration & User ID Verification & Security

There are numerous things that we do to ensure all users have a safe and enjoyable experience using this site, free of the threat of fraud or identity theft.

At registration we look up any submitted addresses against the Credit Reference Agency (CRA) database for validation. Bank details are checked against a bank details database for accuracy and facilities, for example, that the account supports direct debit function. We encrypt stored bank details. Numerous other items are checked in a similar way.

When a borrower submits a Loan Request we conduct numerous checks before referring to our CRA, Equifax.

We also check against INSIGHT, the database maintained by the CRAs to record  credit performance data from all the credit industry, users, banks, CRAs and debt collectors, etc., who share such data.

Being members of CIFAS, the UK's Fraud Prevention Service, we also make enquiries on their database containing over half a million records of frauds, attempted frauds and victims of fraud or attempted fraud.

We also run a series of checks and tests to ascertain, for example:

i) that any bank details supplied actually belong to those who supplied those details.

ii) that the supplier of a residence address actually resides at the address supplied.

We also may require documents for verification and validation, such as bank statement, payslip, utility bills, passport or photo driving licence, 

For lenders, we are obliged to conduct identity checks and tests in accordance with our HMCE Money Laundering registration obligations, we refer to these our Anti Money Laundering or AML Verifications. These may involve the request of documents and some or all of those verifications mentioned above.

If there are any user transgressions uncovered during the above tests and checks, we will endeavour to clarify the situation. However we are obliged to report any incident to the various authorities and we suspend users from using the website in these circumstances.

Site Operational Security

The operational security of the site is multi-faceted, including the following:

  • Automated Backups 
  • Mail Foundry anti-virus scanning
  • Continual component updates
  • Extension vulnerability checks
  • Event log
  • Access permissions levels & checks
  • Dual approvals, and
  • Administration email notifications. 

For a complete analysis of the site risks and their mitigations please refer to our "Risks & Mitigations" article.

We hope that these measures, amongst others, will give you a safe and secure user experience. If there are any questions or issues with any of this, or any queries, then please contact us.

The Lend Loan Invest Administration Team


Tagged in: Finance Security

Would You Lend Your Savings to a Stranger?

Posted by on in Lending

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I guess that your answer to this question is an emphatic “No”!

However, you probably do lend your savings to a stranger at present!


“How?”  I hear you cry!

Well, if you deposit your money in a bank, which most of us do, they have plenty of demand from people wanting to borrow.

They immediately lend most of your savings to borrowers, about 97% of it, in fact.


Yes, even from current accounts!Your savings are borrowed by all and sundry, including people that borrow and who will never repay it. Businesses, ethical and otherwise, and third world countries borrow your savings. These borrowers are all strangers to you.  There is a rather serious but informative explanation of this practice here.

The bank probably pays you only 0.2% interest for the pleasure of using your savings for people and businesses to borrow at rates upward of 10%! That’s profiteering!  If all the depositors requested their money back at the same time (very much a theoretical proposition!) the banks could not deliver.


So, the way to deal with your savings money successfully in today’s world, is not to put it in a bank, but to work together and make loans of small amounts to our fellow citizens who wish to borrow. These are potential borrowers that you know have been stringently ID verified, credit checked and scored to a common standard. Only the borrower with a good and excellent credit score will be accepted to participate. It’s almost as if you know their financial background in a way that you never could for those borrowers of your banking deposits.


As a lender, you first decide how you wish to place your savings, your risk strategy, your lending criteria, and the return you require, all of which you can specify in a detailed manner. You make the decision as to whether to be “hands-on” about picking your borrowers, or whether you want this completely automated. You can lend to borrowers rated tops for credit worthiness, affordability and stability. Or you can go for higher returns via slightly lower scores and take on board a little more risk. The detail of this process for a lender is set out in the How It Works section.


Because this is all done online (and banks are not involved!) both the lenders and the borrowers get the best deal available. The lender gets a higher interest rates on his money and the borrower pays less for his loan. And it’s less hassle for everybody! A win/win situation!

This is based on the concept of crowdfunding – lots of people contributing to fund a venture.


For the lender there is also an optional default compensation scheme (also crowd-funded), costing very little extra, but giving a huge amount of additional security to your savings and comfort to you.


Getting a loan via couldn't be simpler. Register, subscribe, fill in an online form, wait a couple of days, while they scrutinised your impeccable references and your loan request will become active on the site. A few more days and you will have a serious loan proposal to consider at an affordable interest rate! Accept and in three days the loan money you wish to borrow will be in your account! Under two weeks from start to finish! That beats the rather humiliating slow and tedious carry-on trying to borrow from the bank! The detail of this process for a borrower is set out in the How It Works section.


It is a sustainable lending model unlike the retail banking model for lending and borrowing outlined above. The completely undesirable side effect of the current banking model is that it increases the money supply in a way which is out of the control of the Bank of England and the Government, and this leads to inflation. That is an unsustainable lending model.


This is online Person to Person, or Peer to Peer, (“P2P”) or Social Lending and Borrowing and you can do it with . This P2P model is perfectly matched lending and borrowing, and therefore is a sustainable model, and it does not show any of the unwanted and undesirable side effects. This is the lending and borrowing model for the future!

Recent comment in this post - Show all comments
  • SAadmintim
    SAadmintim says #
    My comment (Bloggs) on the Lending to Strangers Blog!