UK P2P Lending Marketplace Lendy in Administration

P2P Lending marketplace Lendy is in administration according to a statement by the British regulator FCA: “On 24 May 2019, following action taken by the FCA, Lendy Ltd, a regulated Peer-to Peer (P2P) firm, appointed Damian Webb, Phillip Rodney Sykes and Mark John Wilson of RSM Restructuring Advisory LLP as administrators. The same administrators have been appointed for two further related, but unregulated, firms: Lendy Provision Reserve Ltd; and Saving Stream Security Holding Limited. These appointments have been made by the firms, in respect of Lendy Ltd, with the consent of the FCA.”

There is an ongoing FCA investigation into the circumstances that have led to this action.

Lendy was in growing troubles over the past weeks. Lendy was put on a FCA watchlist in January. In April the FCA restricted the actions the company could take ‘[the firm must not] in any way dispose of, deal with or diminish the value of any of its assets and must not in any way release client money without in either case the prior written consent of the authority’.
The interest payments for April, due on May 1st, were delayed for 2 weeks, which Lendy blamed on technical problems with the banking partner. Early today trading on the secondary market was suspended, when the ability to trade was removed. However the trading had nearly stopped anyway as there was little buyer demand.

Lendy finally succumbed the unsustainable level of defaults of the development loans and the unsatisfactory level of recoveries from these. Members of the management were furthermore already engaged in roles in other companies.

There is an outstanding loan portfolio of about 155 million GBP, of which about 90 million GBP are in default.

These events come a year after another property lending marketplace, Collateral entered administration.

Other European p2p lending companies that failed include Boober, Comunitae and Trustbuddy.

Collateral UK in Adminstration – a Summary for Investors

Yesterday evening investors on the Collateral p2p lending marketplace were informed via email by a letter by Gordon Craig that he was appointed administrator for Collateral (UK) Ltd, the company running the marketplace.

The company is continuing to trade under his supervision, but will not be facilitating any new loans and the secondary market is closed at the moment. Reason for the company going into administration is given as ‘The Company was operating in the belief that it was authorised and regulated by the Financial Conduct Authority under interim permission. It has transpired that this is not the case and consequently the Company has ceased lending‘.

Most reassuring for investors into loans is, that he states: ‘Please note that your investment is safe and this is a procedural and compliance issue. … ‘

Investors into loans do not need to take any immediate action. ‘I have lent money via the Collateral platform do I need to do anything? No. Subject to the borrower continuing to make payments of interest and capital those will be returned to you in accordance with the Collateral terms and conditions.’

At a later point it was clarified that uninvested cash and money invested in loans without drawdown is also safe:’ I can confirm however that any monies that are sat on the platform and are not invested are ring fenced in a separate client account and the intention is for these to be returned to all investors after the Administrator has obtained control of the bank account and carried out a reconciliation.

As P2P-Banking has learned, the individual loans are bankruptcy remote, with security held by a separate security trustee – Collateral Security Trustee Ltd.

Collateral has lent about 17 million GBP since the start, most loans were secured by property.

So that are the positive points.

It remains unclear to me how Collateral could have misjudged the regulatory status? The interim permission seems to have lapsed on January 29th. Again it is unclear whether it was actively revoked by the FCA. Investors analyzed yesterday that Collateral had quitely removed references to FCA authorisation (e.g. from email footer) after January 30th. Worse yet the company seems to have changed T&C materially and investors complain they were not notified about any change of T&Cs.

There is also the question why it was allowed to continue to operate from January 29th to February 28th, if it did not have the necessary regulatory approval (anymore). And the lack of communication (prior to the letter of the administrator which is comprehensive) is a disaster (see my previous article). Putting up a server maintenance note for two days, when you are going into administration is not the right way to do it in my opinion.

The adminstrator has not decided if the website will go live again ‘We are currently looking into the website and the possibility of this being reopened in order for investors to view the balance of their investments, however this isn’t something that will be dealt with until next week at the earliest.’

Several other UK platforms have emailed investors and informed them about procedures in place to reassure them that they have taken all the necessary precautions to be prepared in case of a situation like this.

To sum it up, while it is very unfortunate that a platform goes into adminstration with a chance that eventually it will go out of business, it looks like investors into loans will get off fairly lightly.

According to the FT the FCA commented it was ‘aware of the issue and working with the firm‘. The role of the FCA in this happening leaves some questions open for debate at the moment.

 

Irish Linked Finance secures full approval from UK regulator FCA

Linked Finance announced yesterday that it secured full approval from UK regulator:

I’m delighted to announce that we recently gained full authorisation from the Financial Conduct Authority in the UK. This approval is the culmination of a rigorous 2-year application process and a lot of hard work.

In the absence of any regulatory framework in Ireland, we originally began this process as a way to demonstrate our commitment to operating Linked Finance in line with best practice from the much more developed UK market.

This UK approval also opens several exciting avenues to us in terms of our plans for future expansion. It gives us the opportunity to attract lenders form the UK to support Irish SMEs. It would also allow us to start supporting SMEs north of the border, as well as paving the way for a full UK roll-out.

The P2P industry in the UK is the largest in the world on a per capita basis and platforms there are originating more than €1 billion in lending each quarter. It would be a logical next step in our evolution.

That said, our primary focus remains on Ireland and helping to grow the sector here as market leaders.

This authorisation in the UK won’t have any major impact on how you use Linked Finance but you may see some slight changes and modifications on the site, as we look to implement some of the various requirements, such as warnings and disclaimers, that would be required when operating in the UK.

The fact that we have gained full authorisation from the FCA should simply serve to underline that Linked Finance has developed the type of management processes and controls that are in line with industry best practice.

The timing couldn’t be better too.

This announcement comes as the Irish government have launched a public consultation in relation to regulating the sector here.

It’s a move that we wholeheartedly welcome. We believe that all platforms who want to operate in Ireland should be required to operate to the same high standards as Linked Finance.

Obviously, this approval from the FCA demonstrates that we are well ahead of the curve in the Irish market and we are encouraged that the Department of Finance is now considering a similar set of rules here.

We recognise that the development of P2P lending in the UK owes a lot to the introduction of government initiatives that promote the industry, including tax-free Innovative Finance ISAs and direct government lending to SMEs, via the British Business Bank, on platforms such as Funding Circle and RateSetter.

We would love to see the same type of support here and we will be using the current public consultation as an opportunity to promote similar initiatives in Ireland.

For our Irish lenders, this approval from the FCA in the UK should serve as further evidence of our commitment to developing a strong and stable platform that will continue to deliver healthy returns while providing much need credit to great local businesses.

P2P Lending Marketplace Relendex Receives Full FCA Authorisation

Relendex logoP2P lending marketplace Relendex, which does commercial real estate lending directly connecting creditworthy borrowers to investors, has full authorisation from the Financial Conduct Authority (FCA). The regulation will allow Relendex to launch its new Innovative Finance ISA giving retail investors  tax efficient lending to the U.K. commercial property market. Founder and Chief Executive Officer of Relendex Michael Lynn, said:

“FCA full authorisation marks a fantastic start to 2017 for the Relendex team and platform which will further encourage and facilitate investment in commercial property from both our UK and foreign investors. The appetite for P2P marketplace lending in the property sector continues to grow at an incredible rate with the advances in technology resulting in further market share being taken from the high street banks. Receiving full authorisation will further accelerate this growth and demonstrates that Relendex’s robust operational infrastructure has met with the highest standards demanded by the FCA, bringing increased transparency and confidence to our customers. Relendex, an early mover in security-backed commercial property lending for investors, specialises in innovative finance through its nimble P2P marketplace lending platform technology and ultimately improves accessibility of established and secure asset classes into the direct retail and institutional investor market. The … approach and automated secondary market provides much needed liquidity to lenders.”

Relendex says it has sustained zero defaults on its loan book to date.

Obtaining ISA manager status on the back of this full FCA approval is the next step for Relendex allowing them to be one of the first movers in offering the Innovative Finance ISA to retail investors – the tax free wrapper and P2P investments that is forecast to propel the industry into the mainstream.

Moneything Gains Full FCA Authorisation

Moneything logoMoneything announced  today that have been fully authorised by the Financial Conduct Authority (FCA).

Moneything see this as a significant milestone for our business and the result of just over 18 months’ work that involved the scrutiny of every aspect of our business.

In the announcement Moneything says

Many platforms in the P2P industry are working hard to gain their full permissions and we are one of the first few platforms to be granted full authorisation, ahead of some of the largest P2P companies.

This will help to give our lenders and borrowers confidence that we meet high standards in the way we operate, based on the regulations set by the FCA.

We have had some extraordinary assistance along this journey from our compliance consultants and our legal advisors who have helped us to navigate the complex regulatory landscape. We would like to thank them and the MoneyThing team who have all contributed to our authorisation.

There will be a few changes as a result of our authorisation. Significantly, we are no longer able to pre-fund loans and we will be introducing new lender terms for new loans. A full update on the changes and how they will affect lenders will be provided shortly.

Now we are authorised we can look towards launching an IFISA offering to lenders. This will be subject to HMRC approval and we will release further information in the coming months.

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Rebuilding Society Receives Full FCA Authorisation

Rebuilding Society LogoP2P Lending marketplace Rebuilding Society just announced that it has received full FCA authorisation.

Rebuilding Society has been awarded full authorisation from the Financial Conduct Authority in recognition of our compliance with sector-specific regulations.

We are very excited to share news of this major achievement and important milestone with our community. Authorisation means that we meet the rigorous standards set by the FCA and that we can soon start to offer the Innovative Finance ISA.

Although we have been operating under FCA rules on Interim Permission since April 2014, being granted full authorisation helps us to continue building on the important relationships of trust we have with all our clients. We are proud to have achieved this milestone ahead of many other platforms, which we believe is testament to our small but dynamic team, systems, processes and controls.

It has been a long journey, consuming considerable energy and investment, since we applied for full authorisation in November 2014. We have continued to grow as a business and improve on our core processes throughout. The regulatory landscape is continuously changing, and we will make sure we stay abreast of developments that arise from our post-implementation review.

We are committed to delivering a top-quality service to all our customers, to assist investors by providing multiple investment options and to assist our borrowers in finding business finance that is more than just a financial transaction. We are now taking pre-registrations for the IF ISA and will confirm once we can on-board new accounts. Please look out for further updates; we know that many of you are keen to benefit from frequent, compounded returns.

FCA Publishes Interim Feedback Following a Call for Input to the Post-Implementation Review of the Rules for Crowdfunding

In August the FCA posted a call for input preceeding a planned review of the current regulation of p2p lending and crowdfunding for equity. Today the FCA publishes interim feedback. The feedback statement provides a first response to the feedback received and sets out next steps.

Based on a review of the feedback received, issues seen during the supervision of crowdfunding platforms currently trading and consideration of applications from firms seeking full authorisation, the FCA believes it is appropriate to modify a number of rules for the market.

Initial findings

Loan-based and investment-based crowdfunding

For both loan-based and investment-based crowdfunding platforms the FCA has found that, for example:

  • it is difficult for investors to compare platforms with each other or to compare crowdfunding with other asset classes due to complex and often unclear product offerings
  • it is difficult for investors to assess the risks and returns of investing on a platform
  • financial promotions do not always meet our requirement to be ‘clear, fair and not misleading’ and
  • the complex structures of some firms introduce operational risks and/or conflicts of interest that are not being managed sufficiently

Loan-based crowdfunding

In the loan-based crowdfunding market in particular the FCA is concerned that, for example:

  • certain features, such as some of the provision funds used by platforms, introduce risks to investors that are not adequately disclosed and may not be sufficiently understood by investors
  • the plans some firms have for wind-down in the event of their failure are inadequate to successfully run-off loan books to maturity
  • the FCA has challenged some firms to improve their client money handling standards

Proposals for new rules to be considered in Q1 2017

The FCA plans to consult on additional rules in a number of areas. These include more prescriptive requirements on the content and timing of disclosures by both loan-based and investment-based crowdfunding platforms.

For loan-based crowdfunding the FCA also intends to consult on:

  • strengthening rules on wind-down plans
  • additional requirements or restrictions on cross-platform investment
  • extending mortgage-lending standards to loan-based platforms

The FCA’s current rules on loan-based and investment-based crowdfunding platforms came into force in April 2014. They aimed to create a proportionate regulatory framework that provided adequate investor protection whilst allowing for innovation and growth in the market.

The call for input in July 2016 launched a post-implementation review of these rules. The paper summarised market developments since 2014 and some of the FCA’s emerging concerns.

Andrew Bailey, Chief Executive of the FCA, said:

“Our focus is ensuring that investor protections are appropriate for the risks in the crowdfunding sector while continuing to promote effective competition in the interests of consumers. Based on our findings to date, we believe it is necessary to strengthen investor protection in a number of areas. We plan to consult next year on new rules to address the issues we have identified.” Continue reading