PEER-TO-PEER buy-to-let lender LandlordInvest has announced changes to its wind-down plans ahead of the upcoming regulatory deadline.
The platform has told investors that it is no longer using microloan provider Street (UK) C.I.C. for its back-up servicing and will instead manage any wind-down in-house.
It comes as Street (UK) C.I.C. is shifting its own focus onto its core business – providing short-term microloans to consumer borrowers.
According to the new Financial Conduct Authority (FCA) rules which come into effect on 9 December, all peer-to-peer platforms must be able to show evidence that arrangements are in place to facilitate a wind-down, should the platform fail.
LandlordInvest has determined that given the size of its loanbook, it would be more cost effective to manage any possible wind-down in-house.
“As required by the FCA rules, we have carefully estimated the costs of a wind down and confirm that the loan book would generate sufficient revenues to cover the costs of a wind down,” said a LandlordInvest spokesperson in an email to investors.
“We also reserve the right to charge a special situations fee to cover the costs of a wind down by increasing the borrower servicing fee on active loans in the event of a wind down. The special situation’s fee would only be charged to cover the costs of a wind down, with no profit element attached.
“We therefore have elected to in the event of the firm’s wind down, manage the wind down ourselves as we believe it would be of benefit to our customers given the size of the loan book and knowledge of the loans.”
The platform added that it will remain in discussions with third parties who provide back-up servicing and it will review the situation on a bi-annual basis.
“We understand that this notification might cause concern given the recent wind downs of other P2P platforms,” added the spokesperson. “However, please rest assured that we as of date of this email, have no intention to wind down our operations.”