Back-up Servicing Checklist for Marketplace Lending Platforms

A checklist for back-up servicing arrangements relating to loans originated by marketplace lending platforms

“Having a back-up service provider is a crucial aspect of marketplace lending and provides investors with confidence that there is no platform failure risk attached to their lending.”

David De Koning, Head of Communications at Funding Circle

This checklist is for online lending platforms and loan servicers who need to establish a back-up servicing arrangement

As with any other commercial arrangement, it’s critical that the parties have a common understanding of the key terms. This checklist is designed to speed up the negotiation and documentation process, by focussing the parties’ attention on the issues that matter.

“Good to see hardcore content entering the Fintech space. Can only professionalise firms who are now moving well beyond startup into ‘maturing’.”

Mike Baliman, Host of the London Fintech Podcast, commenting on the publication of this checklist

The document consists of an 11-page, 141-point checklist of key negotiation points, and has been developed on the basis of our specialist experience in loan portfolios and securitisation structures.

The areas covered by the checklist include the following:

  • The duration of the appointment
  • Details of the relevant loan portfolio(s), including security, regulatory status, technology used for servicing and IP rights in that technology
  • Scope of services required, including cold, warm and hot basis
  • Early warning signs and triggers for escalation of service levels
  • Fees and expenses, including set-up / invocation fees and ongoing fees following each escalation
  • Termination for cause and without cause, obligations following termination
  • Representation and warranties
  • Liability and indemnities
  • Restrictive covenants
  • Key man provisions
  • Next steps, including KYC and due diligence

For more information about how P2P and online lending platforms can put in place back-up servicing arrangements, you can read the following article written by LCN Legal’s Marsili Hale and published in AltFi:

How online lending platforms can put in place the back-up servicing arrangements they need

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Need help?

LCN Legal can help you to put in place all types of loan servicing arrangements that work. We work exclusively on the basis of fixed fees, so that you are in control of your budget. To arrange a free introductory consultation with one of our speciaIists, call us on +44 20 3286 8868 or email us at info@lcnlegal.com.