Proplend replaces back-up service provider

PROPLEND has changed its back-up service provider in the event of a wind-down of the platform.

The commercial property peer-to-peer lender has appointed Resolution Compliance to manage its loans should it ever become insolvent, replacing Target which has been in the role since 2016.

All platforms must detail their wind-down plans and who any back-up service provider would be as part of the new Financial Conduct Authority (FCA) regulations introduced in December 2019.

“In the event of Proplend ceasing to trade, our back-up service provider would take on operationally managing and administering existing loan contracts between lenders and borrowers,” Proplend said in an update to investors.

The platform said the ongoing 10 per cent fee charged on the interest that is payable to Proplend by lenders should be sufficient to provide an ongoing revenue stream through the life of the funded loans to cover the servicing cost for the back-up provider.

Read more: LandlordInvest updates wind-down plans ahead of new regulations

P2P lenders have adopted different approaches to their wind-down plans.

Funding Circle, Zopa and Lending Works all say they would transfer operation of the platform and loans to a third party – Target Servicing – in the event of a wind-down, which could charge an additional fee to cover its costs.

Assetz Capital said it has a standby plan to repay lenders and close the platform, which would be managed by RSM Restructuring Advisory in the event of a wind-down. It said the income it receives under the loan agreements is “more than sufficient to cover the expected costs of winding down the loanbook”.

Meanwhile, RateSetter has said it will manage a wind-down itself but investors may have to pay a fee to fund the costs of closing the business.

Read more: Many P2P platforms unprepared for new standby and wind-down rules