RETAIL investors have been left in limbo about the recovery of their funds after peer-to-peer lending platform Lendy went into administration, amid an investigation by the Financial Conduct Authority (FCA).
More than £160m is currently outstanding on Lendy’s loanbook, with at least £90m of those funds in default.
A message on Lendy’s website has offered an email address and a phone number for creditors to contact the administration team. However, the message added that “the information we have is limited”.
Lendy investors on the P2P Independent Forum and Reddit have expressed concerns about the recovery of their funds.
The platform officially went into administration on Friday 24 May, with the regulator stating that “There is an ongoing FCA investigation into the circumstances that have led to this action.”
The announcement followed months of speculation over the state of Lendy’s accounts. Last year, one borrower threatened to sue the platform and its investors for £10m, claiming that Lendy unfairly placed £8.2m of its debts into default.
In December 2018, Lendy was forced to apologise for slow repayments to investors, as concerns grew about the platform’s rising defaults.
“This has been like watching a car crash in slow motion,” said an industry insider who asked to remain anonymous. “You just hope the lenders get out with most, if not all, of their funds intact.”
Some P2P insiders have speculated that Lendy is being investigated over its legacy operations, which saw investors lend to Lendy, while Lendy issued its loans. This would mean that Lendy was not acting in compliance with the 36H regulation, and would make the platform itself liable to cover any losses – not the borrowers.
The FCA has been keeping a close eye on Lendy’s activities in recent months, and confirmed in April that it had placed restrictions on the platform.
Just last month, a number of senior staff departures led to speculation that the company could be breaking up.
In early May, Lendy’s co-founder Liam Brooke and former chief operating officer Robert Kelly launched a new company which offers cash advances to employees.