THE FINANCIAL Conduct Authority (FCA) has revealed that it intervened in the administration of Collateral because the peer-to-peer lender failed to seek its approval when it appointed an insolvency practitioner.
“The Collateral companies were required to obtain the approval of the FCA when appointing an administrator,” the FCA said in a statement on Wednesday.
“This is designed to protect investors by ensuring an independent person conducts the administration in the best interests of the investors. This did not happen.
“Accordingly the FCA has intervened to ensure investors are protected as the law requires.”
The FCA said that it had made applications to the High Court in Manchester last month to appoint new administrators and the case was adjourned until 27 April.
“Until then, the court ordered that, barring incoming payment of loan interest and repayments and certain other administrative steps, the substantive progress of the administration should be paused,” the regulator said.
“The FCA will continue to work in the best interests of investors in the Collateral companies.”
The statement also provides the FCA’s version of events that led to Collateral entering into administration.
“The Collateral companies operated a P2P lending platform through a website and Collateral UK purported to hold an interim permission from the FCA to carry on regulated activities,” it said.
“In fact, none of the Collateral companies held any valid authorisation or permission to carry on regulated activities.
“When challenged by the FCA, the Collateral companies agreed to cease their lending activities and, on 26 February 2018, the lending platform became inoperative.”