FCA pays FundingSecure investors due to delay in addressing complaints
The Financial Conduct Authority (FCA) is believed to have offered pay-outs to FundingSecure investors due to the time it has taken to investigate complaints about how the collapsed peer-to-peer lender was regulated.
The P2P pawnbroking platform, which was fully authorised by the FCA, closed in October 2019 and CG&Co was appointed as administrator.
Disgruntled investors have been trying to get answers since then, about the regulation of FundingSecure and why issues were not spotted earlier.
Almost a year-and-a-half since its collapse, investors are still uncertain about how much of their funds they will be able to recoup. Loanbook defaults continue to rise and the administration process has been extended by three years.
Investors who had complained to the FCA about its regulation of FundingSecure received messages last week offering an “ex-gratia” payment because it has taken so long to deal with complaints and has been unable to respond while its own investigations into the platform continue.
It is understood that payments range from between £50 to £75 and investors must respond by 12 March.
The emailed message, seen by Peer2Peer Finance News, said the FCA has deferred responding to investor complaints to ensure it “does not have an adverse impact on any ongoing regulatory work by the FCA, which means there is a risk the complaints investigation may prejudice the regulatory action.”
“This might happen if, for example, the complaints investigation findings cut across the likely findings of the regulatory action,” the FCA said.
Marc Mason, an investor who runs the FundingSecure Action Group, said he was not aware of any other P2P platform’s investors that have been offered these payments en masse.
“We have had confirmed by the FCA that the payments are genuine, and to the best of our belief they have been authorised to everyone from FundingSecure who lodged a complaint about the actions of the FCA in relation to the supervision over FundingSecure,” Mason told Peer2Peer Finance News.
“The payment is for a delay in attending to the complaints and nothing more.”
The FCA declined to comment.
FundingSecure gained authorisation in March 2017 and 19 months later a review by a business advisory firm highlighted deficiencies in its client accounts.
Issues were raised surrounding compliance with client money, anti-money laundering and due diligence.
There were also concerns about failings in the experience and capability of the management in carrying out controlled functions.
New management was introduced in October 2018, which injected loan capital to make up for the client account shortfalls.