Peer-to-peer lender FundingSecure enters administration. Second British P2P lender to collapse in six months. Losers: about 3,500 investors.

by 4BigData

www.ft.com/content/4a55853e-f589-11e9-a79c-bc9acae3b654

  • any losses would not be covered by the Financial Services Compensation Scheme.
  • FCA is attempting to clamp down on poor practices in the peer-to-peer sector after finding that many investors did not understand the risks involved in funding loans
  • FundingSecure offered retail investors annual returns of up to 16 per cent by funding property development and pawnbroking loans.
  • did not use borrowers’ credit scores when making lending decisions, instead relying on the value of the assets used as security

And defaults would rise precisely when the value of the collateral (only variable taken into account) would be crashed as well. Super pro-cyclical.

Wondering if those working for the company understood this though, or if people need to maintain certain distance to capture the scam nature of the biz model.

 

 

FundingSecure was backed by BlackRock, not sure who invested in Lendy. These “backers” will lose all of the investment.

” UK property finance company Lendy collapses

Failure raises prospect of multimillion-pound losses for investors who lent to developers”

www.ft.com/content/3ca77892-7e48-11e9-81d2-f785092ab560

“The sector has experienced several high-profile scandals and collapses in the US and Asia, but only a handful of small companies such as Collateral, TrustBuddy and Be The Lender have encountered significant problems in Europe. ”

 

AC