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Wellesley Finance makes loans solely to businesses (these business loans include but are not limited to business development finance, business buy-to-let, and first/second charge loans for business purposes). As a result, these loans do not have the benefit of the protection and remedies that would be available to you as a consumer in the context of a non-business loan. Wellesley Finance is not permitted to undertake retail loans to consumers. If you are a retail consumer seeking a non-business loan, you should not seek to obtain a loan from us. Business loans will be secured on relevant assets and these assets are at risk in the event of the loan being in default. A property asset may be repossessed if repayments are not kept up on a loan or other asset secured on it. If you need advice on any of these matters, or you are in any doubt as to the consequences of taking out a loan with Wellesley Finance (including not being regulated), you should seek independent advice from an appropriately qualified professional. Wellesley Finance recommends that you consider whether a potential business loan meets your own creditworthiness, risk levels and objectives. You should be seeking to borrow funds only if you believe that your business activities are capable of repaying those funds and that you have considered the required repayments in relation to your other financial commitments.

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Loan Book Review from the Chief Risk Officer

February 3, 2017



During the course of 2016 we carried out a detailed review of all lending and have taken a number of actions designed to further reduce the risk profile of new lending. These actions include restructuring of the lending and loan management functions, the appointment of a new leadership team and gaining board approval of an updated lending strategy which focuses the business solely on property development lending in the UK outside central London.

Loan_Book_2016Loans are reviewed on a monthly basis and the potential for loss is assessed by experienced credit professionals. The review process involves regular visits to the developers’ site and the appointment of quantity surveyors who provide reporting on the progress that the developer is making and any potential overruns.

As at the end of 2016 the total cumulative provisions of £4.0m represents 1.1% of the lending facilities agreed since the business began lending in 2013. Some 68% of the total relates to three loans out of the 251 that were made since the company started lending. These loans were made in 2014 and without these, the cumulative figure would have been £1.3m which would have been 0.4% of lifetime lending.

Case 1 – This was a £3.1m loan to develop 5 houses. Poor construction management, cost overruns and delays ultimately meant the project became unviable in its original form. After a necessary pause, we have stepped in and are currently building it out. There is a £0.6m provision against this loan.

Case 2 – This loan totalled £5.3m relating to four properties.   Health and safety issues occurred on site which resulted in construction delays. The properties have been sold and a loss of £1.5m was crystallised.

Case 3 – This was a £1.7m loan to develop one high-value single property. Complications arose from planning irregularities and ineffective cost control. The property has now been sold, crystallising a £0.6m loss.

While we have fully provided for the losses we expect to incur, we continue to actively pursue both third party negligence claims and the personal guarantees of the borrowers. This may result in recoveries in the future but the Board does not believe it appropriate to make any allowance for these at the present time.

The cases above were outside the credit policy which exists in the firm today and as a result, the Board and shareholders felt the right course was to make good these losses from shareholder capital and not pass them on to our investors.

With development finance, it is not uncommon for a project to take longer than expected. Extensions to loan facilities are sometimes required as a result of construction delays or the property sales period taking longer than expected. When a loan is expired, it does not specifically indicate that there will be a loss and it should be noted that the expiry does not affect the security that we hold over the property. Of the 63 loans made since the start of 2015, 10 (15.8%) are currently beyond the original term.


Stephen Bell, CRO


This post is issued by Wellesley Group Investors Limited solely for information purposes and does not constitute an advertisement.  This document is not and must not be construed as a solicitation of a financial instrument in any jurisdiction.

Wellesley is the trading name of Wellesley Group Investors Limited (Company No. 08478238). Wellesley Group Investors Limited is not authorised or regulated by the Financial Conduct Authority and your capital is at risk and is not covered by the Financial Services Compensation Scheme. Wellesley Group Investors Limited is registered in England and Wales and its registered office is at St Albans House, 57-59 Haymarket, London, SW1Y 4QX.