Funding Circle to shut down forum amid property loan debate
FUNDING Circle is closing its community forum on Tuesday, as it says that some investors are “asking questions about a narrow range of technical topics” that would be better dealt with through its investor support team.
A thread on short-term property loans has now attracted 1,300 replies and more than 59,000 views. Lenders on the platform expressed their concerns around a tranche of London-based property loans that are going into default.
“For those wishing to continue discussions around the short-term property loan thread, our investor support team will continue to be on hand to answer queries about this, and all other businesses you lend to; although at this stage we are limited in what we can say so as not to prejudice any investigations or claims that may be carried out during the course of the administration,” said Funding Circle.
The platform suggested that its investors share their views on another website called the P2P Independent Forum instead.
Funding Circle said earlier this month that it is winding down its property lending to refocus entirely on its original small- and medium-sized enterprise lending activities. It said it will phase out its property funding by mid-2018.
An administrators’ report from insolvency firm Begbies Traynor, obtained by Peer2Peer Finance News, reveals that Funding Circle is owed £1.72m from Meliden Limited, a London-based property firm that has become insolvent.
“Based upon the current condition and status of the property, we anticipate that it is unlikely [Funding Circle] will be paid in full from the proceeds of the sale of the property and thus, will suffer a shortfall,” the report said.
It separately emerged that Funding Circle’s co-founder and chief executive Samir Desai CBE has been terminated as a director of two of Funding Circle’s subsidiaries, according to Companies House documents dated 27 April 2017. One is its property arm, Funding Circle Property Finance and the other is Funding Circle Trustee, which is the holder of legal title on defaulted loans.
“The aim of the forum was to foster a community of customers, both investors and borrowers, who could discuss their experience of lending and borrowing through Funding Circle and help each other,” said Natasha Jones, head of corporate communications at Funding Circle, in response to P2PFN’s request for comment.
“Five years on, we are pleased that the forum has been a place for discussion and feedback, however it is now used by a small number of investors whose enquiries, which are mostly about individual loans, are better dealt with through our customer service team.
“The closure has nothing to do with the performance of Funding Circle property development loans over the last three years which continue to outperform expectations. Investors have earned an average of seven per cent since launch and more than £22m in interest on property loans alone.”
Funding Circle is the third-largest lender to UK small businesses. In January, it raised £82m in equity investment, which was heralded as “further evidence” of the importance of UK fintech by Chancellor Philip Hammond.