Our business

TrustTwo

TrustTwo was acquired as part of the Everyday Loans transaction, announced on 4 December 2015.

Following a pilot phase in 2013, the business was launched in 2014 and provides loans to UK residents who are typically in a younger age bracket and have either a limited or impaired credit history. With most customers coming from financial brokers but also from Everyday Loans branch referrals, during 2016 the business grew its loan book throughout the year as shown by the following chart (note December is a seasonally weak month due to the Christmas holidays):

Applicants complete an online application in which they nominate a guarantor who meets mainstream prime risk lending requirements. While the addition of a guarantor does add to the complexity of issuing loans, no upfront fees are charged for the application process. After the applicant’s guarantor consents to the arrangement, successful applications result in the loan being paid into the guarantor’s account, for transfer to the applicant. This helps to counter fraudulent applications since guarantors bear ultimate responsibility for repayment of the loan.

Guarantors are normally family members with a prime or near-prime credit rating, (not partners or spouses) but can also be friends or colleagues. By taking a guaranteed loan, customers benefit in a number of ways. First, by accessing credit at a much lower rate of interest than if they had tried to secure the loan on their own, they have a much better chance of being able to meet the threshold of affordability for the loan amount; second, even if they could still afford it, they potentially remove the need for them to have to resort to higher cost credit solutions; and finally, when these borrowers make their loan repayments on time, it can help them to improve their credit rating and make access to cheaper high-street lending possible in the future.

TrustTwo’s platform has significant capacity for growth in what is a large and concentrated marketplace. While more complex to deliver than straight unsecured lending with the introduction of a guarantor, the predominantly online nature of the application and client servicing process helps to keep operating costs under control.

Strategy for growth

TrustTwo will continue to benefit from a shared infrastructure with Everyday Loans and will seek additional growth through:

  • further improvements to the customer journey that will improve conversion rates;
  • further expansion of the product range, increasing our appeal to customers;
  • increased volumes through financial brokers as well as direct channels; and
  • continued promotion of the TrustTwo product through the Everyday Loans network.