Defaults and Losses
When you invest in loans, there is always a possibility that some of them won't be paid back on time (Default) or you might lose money (a Loss). Our Credit Risk page contains information on how Defaults are defined.
To help you manage your risk, the table below shows Defaults and Losses levels in the loan portfolio.
It is important to note that a Default does not necessarily mean that there will be a Loss. We take asset security on loans which, if the borrower can’t pay back the loan, can be enforced to sell the asset to get back some or all of the money they owe you. Also, we operate discretionary Provision Funds for most of our Investment Accounts to help cover any Defaults and Losses but they could become depleted so we can’t guarantee that there will never be a loss.
We have reviewed our credit risk model and how we publish our Defaults & Losses in light of FCA Policy Statement 19/14. Due to changes to our credit risk model the Defaults and Losses information we report is not directly comparable to the Defaults and Losses information we reported before 9 December 2019.
The Data used in the tables below is as at 31 October 2023. It does not include data in respect of loans made to borrowers under the Coronavirus Business Interruption Loan Scheme (CBILS) and other loans funded on a whole-loan basis by institutional investors.
Please be aware that due to the Coronavirus pandemic there are likely to be upward movements in our Defaults and Losses positions with Borrowers. In the circumstances, the information in the tables below should not be regarded as indicative of future loan performance.
The Provision Funds we offer do not give you a right to a payment so you may not receive a pay-out even if you suffer loss. The funds have absolute discretion as to the amount that may be paid, including making no payment at all. Therefore, investors should not rely on possible pay-outs from the Provision Funds when considering whether or how much to invest.
Please see also our Provision Fund policy
The figures are shown as percentages of the total amounts of loans originated in each calendar year.