Collateral hit the headlines again last Friday, when it emerged that the City regulator is commencing criminal proceedings against two former directors of the collapsed peer-to-peer lending platform.
Here Peer2Peer Finance News sets out a timeline of the platform’s administration process so far.
In the last week of February 2018, Collateral shut down its website and became uncontactable, amid questions over the firm’s regulatory status.
It then entered into administration on 1 March that year, after it emerged that it was operating without the correct regulatory permissions.
According to The Times, Collateral told prospective investors it held an “interim permission” for regulated activities and the Financial Conduct Authority’s (FCA) register showed this appeared to be the case. However, on the register someone changed the name on Regal Pawnbroker, a separate business where Collateral’s founder Peter Currie was a former director, to make it look like Collateral held the permission instead.
Refresh Recovery was appointed administrator but was replaced by BDO after a High Court approved the FCA’s request to change practitioner.
In June, BDO said the estimated aggregated claims of investors and creditors exceeded the book value of the assets held by the companies.
In January 2019, BDO asked Collateral investors for permission to take enforcement action against borrowers who were unable or unwilling to repay their loans, and said it was wasn’t able to provide tax statements because of the incomplete nature of the company’s books and records. The administrator wrote to some lenders in March to seek detail on investor loan exposures.
In April, a final report from BDO showed that £1.67m of P2P pawnbroking loans were made by Collateral and secured over assets with a book value in excess of £2.4m, but the administrator had identified discrepancies in the valuations given.
The administrator revealed it was still waiting for a response from Collateral’s former directors over discrepancies in the client money account and with the valuations of the pawnbroking assets before they could be sold.
In July 2020, BDO said that it had completed reconciliation of individual investor loan exposure and was awaiting feedback from investors to check the documents for accuracy.
The administrator said it had taken enforcement action on the majority of Collateral’s property loans while the pandemic made it harder to sell and the money from sales made had not yet reached BDO as there were still expenses to be paid.
BDO said there were still issues with valuations of Collateral’s P2P pawnbroking loanbook. It said it was seeking clarification from the directors on discrepancies and was awaiting a response on a discrepancy between the balance held in the client account and Collateral’s records.
In July last year, BDO said that a “limited number” of investors disagreed with its analysis of their loan exposure and asked lenders to provide proof if they think they were owed money and said it was also seeking legal guidance on setting a deadline for when investors can make claims.
In May, FCA chief executive Nikhil Rathi told MPs that the investigations into Collateral, including a potential hack into the regulator’s register, were very close to a conclusion and that he hoped to provide another update by September.
In September, Peer2Peer Finance News reported the FCA would not be providing an update on its investigation until the end of the year.
On 7 January, the City watchdog commenced criminal proceedings against Peter Currie and Andrew Currie, with the brothers facing two charges under the Fraud Act 2006 and one charge under the Proceeds of Crime Act 2002.
It is alleged that the Curries falsely told investors that they were regulated by the FCA to operate a P2P lending business and that they were asked to cease all regulated activities in January 2018, but before the company ceased trading, the brothers dishonestly abused their positions by transferring funds to a separate company.