One of the joint administrators of the failed peer-to-peer lending firm FundingSecure has told a court details of exactly how much money was missing, and when, from what should have been a ringfenced bank account.
Part of a series of reporting on the so-called Quistclose Claim
In 2022 this site exclusively reported on retail lenders who were raising money for legal advice after being faced with the prospect of being joined to this claim.
Read ‘FCA silent on client account cash grab‘ for a background to FundingSecure and why a large hole was said to have existed in the client account.
Since then the mouseinthecourt has reported on investors anger as the FCA closed their investigation into the firm — with no public action taken.
We also reported the issuing of the claim, including links to the underlying court documents in “FundingSecure administrators to remain neutral on £500k claim against “innocent investors”“
Investors were invited to formally join the claim. You can read our coverage in ““innocent investors” given March deadline in 500k Quistclose claim“
We reported that a representative lender had been appointed to represent all the investors in “FundingSecure – representative lender appointed in £500k Quistclose claim“
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Reporting by Daniel Cloake
‘A Leading Team’ as advertised in FundingSecure promotional material
Court documents deployed at the High Court, exclusively seen by the mouseinthecourt, have revealed a bit more of the timeline surrounding the circumstances leading up to the collapse of the fully FCA regulated P2P firm FundingSecure.
A client account is a bank account which holds ‘client money’ – these are funds owned by its customers, and not the business. Client accounts are subject to strict FCA rules.
We previously reported that according to documents filed at Companies House by the Joint Administrators’ “in October 2018 a top tier business advisory firm conducted a review of the Company’s operation which identified deficiencies in the Company’s Client Accounts operated for the benefit of Investors“.
FundingSecure say they had identified the source of the deficiencies as a result of the fraudulent behaviour of its then director Richard Martin Luxmore, 60, of Reading.
At a hearing on Monday 14th October 2024, Edward Avery-Gee of insolvency firm CG Recovery told the court in a written statement that the size of the client account shortfall on 3rd January 2019 was £888,827.97.
This date is pertinent because it’s when Spencer Tarring, 42, made what was described as an “initial investment” into FundingSecure of £500,000.
It would appear that Mr Tarring, a self-styled “Entreprenuer (sic), mentor, & crypto specialist”, did not know that his money was being used to fill in some of this massive £888k black hole.
The statement of Mr Avery-Gee goes on to explain that the investment “was repaid in full to him on 9 April 2019 which resulted in a shortfall in the client account of £595,000“.
This is a significant moment in the timeline – Richard Luxmore had already left the company at this point. The company was now under the control of directors Carl Davies and Raj Kumar who had joined in October 2018.
The deficiencies in the client account should not have been getting bigger.
Three days later, on 12th April 2019, an off-shore entity called JC Starr Holdings Limited, registered in the British Virgin Islands, and under the control of the aforementioned Spencer John Coite Tarring, sent £499,985 back into the client account.
This sum of £499,985 was never returned and formed the sum at the centre of the so-called Quistclose Claim.
Mr Avery-Gee explains that “Following JCS’ loan on 12 April 2019, there was a shortfall in the client account of £95,000. The last date on which the client account was in shortfall was 11 July 2019. On that day, Mr [Raj] Kumar paid £94,595 into the client.“
FundingSecure entered administration in October 2019. It’s remarkable that the client account only balanced for the last three months of the firms solvent existence. It’s also remarkable that the regulatory position with the firm was only regularised because an investor was, he says, duped into depositing funds.
It’s all the more astonishing that the FCA decided to close their investigation into the firm with no public action taken.
With even basic details of the FCA investigation kept top secret it’s only the small dribs and drabs of information released in court proceedings like this that truly shine a light behind the scenes.
The more details that are revealed the more questions are raised over whether consumers were truly given the protection they deserve.
Case Files
06/09/2023 – Claim form issued
06/09/2023 – Particulars of claim filed
16/10/2023 – Filing of defence deadline extended
09/11/2023 – Defence statement filed
13/01/2024 – Court order filed
03/02/2024 – Court order filed
Hearing Details
JC STARR HOLDINGS LIMITED – Claimant
-v-
FUNDINGSECURE LIMITED (in administration) – Defendant
Case number: BL-2023-000078
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