Funding Secure Limited – in administration
On the 23rd October 2019 Peer-to-peer lender Funding Secure Limited went into administration. The collapse has left thousands of investors exposed to significant losses.
Furthermore the lender was seen to be one of the UK’s leading alternative investment platforms.
The problems started when a large number of borrowers struggled to pay back their loans. On top of the borrower repayment issues a large lawsuit was also noted in the background.
At the time of the lenders failure there was nearly 500 loans on it’s books with a total estimate of around £80million. This £80mil was being funded by nearly 3,500 investors who are now waiting to see if they will be repaid.
Administration
CG & Co, which has been appointed as the administrator, said: “The company’s difficulties have been documented online and investors are aware that certain loans have not performed in line with expectations, in addition to the issues caused by the fraud-related litigation in which the company has become embroiled.”
Peer to Peer lending history
This is not the first peer to peer lender to collapse in recent years. Only this year the property lender “Lendy” collapsed in May 2019 with a total amount owed to investors at just over £150million.
Generally speaking could this be the start of a chain of collapses in the Peer to Peer financial sector?
Financial Conduct Authority
It is common in the finance sector that the Financial Conduct Authority needs to do more to protect both lenders and investors from poor practices.
The FCA have issued letters to peer to peer lenders raising concerns over poor practices. The letters warned of a potential crackdown by the regulator.
What happens next?
As it stands nothing changes and any borrowers with a facility with Funding Secure Limited would be expected to continue to pay off their loans as normal for the time being.
A statement from the administrators
“It is too early for the administrators to say how much money they will be able to return to the creditors and to the investors, and when any payments will be made to them,” CG & Co said.
“The administrators are now evaluating the company’s current financial position and working to maximise recoveries either in the short or longer term. The administrators will continue to update the creditors and investors with the progress that they are making with their investigations.”
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