eMoneyUnion provides personal loans to borrowers at a representative APR of 9% for a secured first charge on a low LTV property up to 84.5% for unsecured loans to those with low credit ratings. In turn lenders are paid between 7% on similar secured loans and up to 15% for the riskiest rated unsecured loans. The difference between rates for lenders and borrowers can partially be explained by contributions to the provision fund, as borrowers contribute up to 25% of repayments into the ‘eProvision Fund’ that exists to cover bad debts.
Expected Returns: Not clear. Gross rates up to 15%, ISA documentation suggests ‘up to 6%’ for highest credit ratings and ‘up to 10%’ for low credit and secured.
Provision Fund: Yes.
Sell Out: Yes.
Minimum Investment: £10.
Cashback: £20 on £2000 invested (1%).
Innovative Finance ISA: Registration via justus.co for early access.
You bid on new loans via the ‘eMarketPlace’:
You can buy and sell existing loan parts on a secondary market called ‘eMicroLoans’:
There’s also a handy feature to auto-bid, called ‘eBidPal’. Many peer-to-peer lending platforms have a basic bidding system where new loans are released at xx:00 o’clock and you have to personally go and log in to bid. The problem with this is that the most popular and smaller loans sell out in an instant so it becomes a case of ‘fastest finger first’. Today for example I’d set an alarm for the 11am release of a nice, high paying, well secured loan on Funding Secure. There was a £25 bid limit per person so I thought I had a chance. So, on the dot at 11:00 I logged in on my phone and before 11:01 I saw it had sold about 40%. I clicked on the link to open the loan page and it had already shot up to 86% sold. I clicked to buy straight away but it had in that second it sold the last 100%! As you gather from my rant this is frustrating for those who attempt to get these type loans and impossible for those with a job or doing other activities. eMoneyUnion attempt to get around this problem with their ‘eBidPal’:
eBidPal is a feature that enables you to make loan offers to new borrowers as soon as they become available. It is the best way of making use of your capital so that it is always working for you as opposed to sitting on deposit earning little or no interest.
If you choose to use eBidPal you will be able to choose which Risk Rating borrowers you would like to lend to and the denomination you would like to lend to each borrower.
Example: You have £2000 to lend, and you would like to lend to Risk Rated AA and you would like to lend £100 to each borrower, you will essentially have placed bids to lend with 20 borrowers within that particular risk band.
Some more detailed research
The first thing I noticed when using eMoneyUnion was its similarity to another platform called RebuildingSociety. Looking at the code I saw the same WordPress implementation with even the same plugin ‘Ameuri’ which appears to handle most of the peer-to-peer lending features. WordPress is a ‘content management system’ which allows easy development of websites (such as this one). It means that instead of building the site from scratch, they just used WordPress and some free plugins like ‘buddypress’ for user management ‘w3 total cache’ for performance, then programmed their own custom plugin for all the peer-to-peer functionality. You can check for more detail with this detection tool if you are so technically inclined. Later I found out that eMoneyUnion was a white labelled solution provided by a sister company of RebuildingSociety. For lenders in the platform this brings pros and cons. On the upside, you may feel there is less platform risk: using a white label solution eMoneyUnion does not have to keep a large IT team on the payroll, so in theory would have less risk of going bust. On the downside, what happens if there is some hack or emergency with the website? Would eMoneyUnion be reliant on a third party to fix its systems? What happens if the third party stops its support? Further research showed that eMoneyUnion had managed to raise £427,580 in a crowdfunding round two years ago, so you would hope that they’ve since employed a talented in-house IT team to maintain the solution.
The CEO of eMoneyUnion, Lee Birkett has a long background in finance, risk and compliance. On his background, he writes:
First job as a Bank clerk in 1988 with Nat West and been involved in finance ever since. Trained as an IFA in the 90′s and founder of the first online Finance and Insurance Network. Grew revenues from £30K p.a to £10 million p.a. 1994 – 2004. Experienced FSA authorised individual 1990 – 2008 responsible for risk, compliance and oversight of £5 Billion + of regulated consumer credit and insurance. Led a successful Flotation on AIM in 2002 aged 30. Sold the trading business with FSA regulatory approval 2 weeks before banking collapse in 2008. Been looking for a better way for finance to function ever since.
You can hear more from the founder from his original pitch for the crowdfunding round I mentioned above:
eMoneyUnion P2P ISA (Innovative Finance ISA)
There’s not a lot of information on the eMoneyUnion website itself about the IF ISA: all I could find were some blog posts from 2015. At this time all the P2P lending platforms were really excited about the government’s positive announcement on ISAs and there was a lot of talk, but since then not many have implemented a functioning ISA. However, in the last few days eMoneyUnion announced plans via their twitter account:
— eMoneyUnion (@eMoneyUnion) August 14, 2016
This links to a new website justus.co which appears to offer automated ISA products that invest via the eMoneyUnion platform:
JustUs has a registration form for ‘early ISA account access’ and warns of potentially limited membership. At first it’s quite confusing what exactly the relation of JustUs and eMoneyUnion is. The website describes this new venture as a ‘trading style’ of ‘eMoneyHub Ltd’. They wish to raise money again via crowdfunding:
JustUs, www.justus.co a financial community, built on transparency, fairness and inclusivity, has launched, looking to raise £5.35m, including £1m on crowdfunding platform Crowdcube.
You can hear directly from the founder again on what they are planning to do:
Updates after speaking to the Founder of eMoneyUnion
When I wrote the first version of this review, I was left confused between the difference between eMoneyUnion and JustUs. If you already have a successful P2P lending platform, why spin out a sub company with no brand recognition?
The founder Lee Birkett got in touch and we had a call to discuss. One key reason for the distinction is related to FCA approval and the changes required for the new ISAs. It appears that JustUs is now in a very good position to benefit from the Innovative Finance ISA with regards to peer-to-peer lending.
Following up on this call I did some research and found the FCA’s portal to check interim permissions on the consumer credit register. Following this link you can check interim permissions by doing a search:
And then clicking through to permissions:
If you compare for example to Collateral, another popular platform offering pawn-loans, you’ll see it has no interim permission for Peer to Peer Lending, just consumer credit business:
eMoneyUnion is one to watch for the Innovative Finance ISA. Speaking to the founder I came away with the impression that they are very aware of the bigger picture and trends in peer-to-peer lending. The guideline rates of return themselves are strong and come with a degree of protection in the provision fund behind it.
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