ORCA Money’s chief executive Iain Niblock has slammed failed peer-to-peer platform Lendy as a “typical example of poor P2P lending”, as he urged investors to seek out less risky loans.
Niblock (pictured), who also co-founded the P2P investment aggregator and analysis firm, said that it was “no surprise that Lendy had gone into administration, citing the platform’s “extremely poor” loan book performance and regulatory issues, which had been a cause for concern among investors for some time.
“Disappointingly, the lender was at one time one of the more popular UK P2P platforms with cumulative lending volumes reaching £428m,” Niblock added. “Over 22,661 lenders were attracted to its simple one per cent interest per month offering.
“The platform grew rapidly in 2016 with cumulative lending growing from £79m by the end of 2015 to £271m by year end 2016. The company has suffered from extremely poor loan performance with worryingly high numbers of loans in defaults. Currently, on the platform there is £97m worth of loans in default and, only £65m of loans repaying.”
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RSM has been appointed as administrator by the Financial Conduct Authority (FCA), but Niblock said that it was still not clear if the firm would be helping with the wind-down of the loan book to the benefit of investors or whether they are purely winding the company down to the benefit of creditors.
Last week, it was announced that Lendy was being placed into administration following an investigation by the FCA. In April, the FCA placed restrictions on Lendy’s business, amid concerns about the rising number of defaults on the platform.
“This does not come at a good time for the industry as we await the results of the FCA consultation where marketing restrictions on the sector are proposed,” said Niblock. “P2P lending was created to provide reasonable returns to people wanting to lend their money and to provide access to capital for people wanting to borrow money.
“The industry has evolved, but largely it remains true to this ethos. Lower risk offerings are available and suitable to wider adoption.
“I hope the FCA will not feel under pressure as a result of Lendy going into administration and the sector continues to serve everyday retail investors. Otherwise, restrictions on the industry may result in the ‘peer’ being removed from ‘peer-to-peer’.”
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