Should P2P wind-down plans account for administrator fees?

Administrator fees could fall under the regulatory spotlight as the cost of managing the books of collapsed P2P lenders continue to spiral, an insolvency practitioner has warned.

P2P lender Collateral is approaching two years since it collapsed and is now in liquidation with the fees for its administrator BDO running close to £1m.

Similarly, RSM, which took on the administration of Lendy last year has reported costs approaching £2m.

Frank Wessely, partner at Quantuma, said these are “educated estimates” but suggests they should be considered now that all P2P platforms must have wind-down plans in place under new regulations.

“It is an educated estimation how much the fees of an administrator might be when dealing with an insolvent platform until the office holders can get under the skin of the company records and loanbook,” he said.

“How these are otherwise dealt with in wind-down plans going forward will no doubt be a topic of continuing interest for the Financial Conduct Authority.”

It will be two years since Collateral entered administration in February. It is now in liquidation but BDO is still working on reconciling the platform data to work out which loan each investor has exposure to.

“What is becoming clearer is that in a distressed scenario there are likely to be deficiencies in the records maintained by an insolvent platform,” Wesseley added.

“These will lead to increased delays and costs ultimately being borne by investors or creditors.

“Two years is a long time generally speaking for creditors in an insolvency to be repaid, however in the P2P sector, it does entirely depend on the state of the platform’s records and condition of the loanbook and associated securities which will determine how quickly creditors or investors are repaid.”

Read more: What do we know a year on from Collateral closure