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Peer2Peer Finance News | August 19, 2019

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P2P platforms reassure investors after Collateral closure

P2P platforms reassure investors after Collateral closure
Marc Shoffman

PEER-TO-PEER lending firms have been reassuring their investors about the safety of their platforms in the aftermath of Collateral going into administration.

Business lenders Ablrate and MoneyThing have both sent messages to their customers detailing their stability, performance and regulatory requirements that mean they have to hold client money separately and have a ‘living will’ that puts a plan in place should a business fail.

Peer2Peer Finance News is aware of investors on other platforms asking to withdraw their funds after Collateral’s website shut down.

Filip Karadaghi, managing director of buy-to-let P2P platform LandlordInvest, said they had seen more withdrawals than usual.

“It is an very unfortunate situation and we are sorry for all affected parties,” he said.

“We hope that this will not result in any capital losses. We had more withdrawals than usually relating to investors withdrawing uninvested funds which we fully understand.

“LandlordInvest is fully Financial Conduct Authority (FCA) authorised which means that we have to follow FCA’s client money rules. Among other things, this includes protecting client money and segregating them from our own funds. We keep our client money trust accounts with RBS.

“It is difficult to predict what the consequences might be, but it does certainly not help the industry to gain acceptance by the wider investment community.”

Ablrate has emailed investors to detail its ‘living will’ procedure. Founder David Bradley-Ward told Peer2Peer Finance News that some of its investors were asking about the Collateral situation.

MoneyThing has also emailed users to detail how its ‘living will’ would work and said it operates a segregated client money account at Metro Bank.

“MoneyThing has been trading as a P2P platform for three years,” it said.

“We are a family business and to date we have been supported by a small group of private investors. They will continue to support us in our growth.

“We meet our capital adequacy requirements and we operate a stable business model that includes ongoing revenue from interest and does not rely solely on new loan origination.”

A spokesman for MoneyThing added that it had not seen any knock-on effects from its own lenders.

“As a result of Collateral falling into administration, I expect lenders will now scrutinise any platform that does not have full authorisation with the FCA,” she said.

“We haven’t experienced any knock-on effects as our lenders recognise that MoneyThing is a regulated business operating with the correct permissions and appropriate lender protections in place.”

Under FCA rules, all regulated platforms must hold client money separately and operate a living will.

It has also emerged that P2P analysts 4th Way previously avoided featuring Collateral in its comparison tables due to a lack of data.

“Collateral has never been listed in the 4thWay comparison tables, because it has never provided us with the detailed data and information that we require to assess the risks,” a blog on the 4th Way website said.

“We always recommend that lenders avoid platforms that are not open and transparent.

“For the same reasons, no 4thWay experts or writers have ever expressed any personal opinions of the risks of using Collateral UK.”

Peer2Peer Finance News revealed yesterday that Collateral had fallen into administration.

Collateral has been unreachable since shutting down its website on Monday and it has emerged that its regulatory permission had lapsed.

Alleged email correspondence between the administrator Refresh Recovery and an investor, posted on the P2P Independent Forum, said that the intention is for all investors to recover their funds in full as the various investments are realised.

All monies that are sat on the platform and are not invested are ring-fenced in a separate client account and will be returned to investors after the administrator has obtained control of the bank account and carried out a reconciliation, the update said.

Read moreBondMason offers to step in on Collateral loans