LENDY’S collapse highlights the issue with opaque investing, peer-to-peer lending analyst 4th Way has warned.
Neil Faulkner, co-founder of 4th Way, said the closure of Lendy was unsurprising, highlighting that it has previously failed to disclose information for the website’s comparison tables.
“While there are bound to be some good opportunities that are shrouded in mystery, it is typical of a great many opaque investment opportunities for them to fold,” he said.
“Indeed, every one of the most notable closures since the beginning of P2P lending have been from opaque, sometimes secretive and misleading, providers.
“The less notable closures have typically wound down so gently that they were hardly noticed by the press.
“Opaque investments also often land investors with losses before closing.”
Faulkner added that BondMason, which has also announced plans to close its alternative investment fund, had also not provided information on its people, processes and results.
However, he praised the alternative finance investor for admitting that it could not compete any longer.
“The greedy, head-in-the-sand option would be to lower interest rates and keep collecting fees as the middleman, or to extend lending to riskier types of loans that BondMason and its lenders don’t understand,” he said.
“Not all P2P lending sites behave with that level of responsibility.”
Stephen Findlay, chief executive of BondMason has rejected claims that the firm was opaque.
“We appreciate Neil’s comments about our actions being responsible and being in the best interests of our clients,” he said.
“We have always sought to put our clients first.
“But we have to disagree with Neil that our business has been opaque. We engage with clients and prospective clients in an open and clear way, as we have done from the outset.
“We contacted Neil in March 2016, shortly after we launched, and when he started his 4th Way service, to offer him a call to discuss our proposition.
“He didn’t respond to our email, and over the past three years he did not contact us to discuss our proposition in detail.
“Nonetheless, he could have found much of the information he desired regarding our ‘people, process and results’ on our website.
“Had he done his research, he may have found us less opaque.”