Members of the public who had collectively invested £152m in so-called peer-to-peer loans facilitated by the firm Lendy Ltd are still waiting for a resolution following the company’s collapse in 2019, as a report says the administration will now last at least 8-years.
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Reporting by freelance journalist and blogger Daniel Cloake.
The firm entered administration in May 2019 after the FCA said they would take action against the company following a compliance visit a few weeks before.
The inspection “identified examples of defaulted property developments where significant capital losses will be passed to retail lenders” and found that “50 payments of over £5,000 totalling nearly £1 million” had been made “which were not notified to the [FCA]” in breach of an earlier restriction.
One of the joint administrators, Mr Damian Webb, subsequently told the High Court in written evidence that:
“Lendy was subject to serious mismanagement for a long period of time. The operations of Lendy were chaotic at the best of times, and investors’ funds were not properly protected or managed. Indeed, it is surprising that Lendy managed to survive for as long as it did.”
Throw in allegations that:
– £350k had been “borrowed” from customer funds in 2016;
– The FCA had discovered a catalogue of concerns in 2017;
– Followed by a review identifying “vital” failures;
– A secret report finding that 20% of borrowers had failed credit checks;
– Lendy’s own CFO claiming he was fired over disclosing “serious financial irregularities“;
– The directors had misappropriated £6.5m of funds via the Marshall Islands (a claim consistently denied)
And you have a lot of unanswered questions about how this fully regulated FCA company was able to process hundreds of millions of pounds worth of the public’s money.
In July 2019 Andrew Bailey, then Chief Executive of the FCA, told Lord Myners confirmed there was “an Enforcement investigation into the circumstances that led to the administration of Lendy“.
We asked the FCA how their investigation was going and a spokesperson told us that “unfortunately we’re unable to say anything further at this stage” and declined to comment.
At a High Court trial in June 2021, used to set a framework for money recovered from outstanding loans, the judge recorded that he heard evidence from an investor and his wife which said they “are both pensioners and it appears that they did invest their life savings in Model 2 Borrower Loans and they have suffered substantial losses“.
The simple question must be asked, 6 years on, why hasn’t anything happened?
In 2014, the Rt Hon George Osborne, then Chancellor, talked of borrowers “being able to bypass traditional banks … and lend money directly through peer-to-peer platforms…” declaring “My message today is simple: We stand at the dawn of a new era in banking.“
Today, the peer-to-peer lending industry has almost entirely collapsed compared to its peak several years ago.
Sadly, a recently published Joint Administrator’s progress report reveals that some 182 Lendy investors have passed away since the firm entered insolvency. The report also reveals that the administration has been extended “to midnight on 23 May 2027“.
It is not know if or indeed when answers will be given to the members of the public who were acting in good faith using a product that had the seal of approval from the FCA and was being widely championed at the highest levels of government.
What is clear though is that substantial sums of money stand to be lost by those who had put their trust in the system.
This site exclusively reported the anger shown by investors when it was revealed that the FCA investigation into another P2P company, FundingSecure, had closed with no public outcome – despite multiple prima-facia issues which, we say, should have warranted intervention by the city regulator.
We hope we won’t have cause to write about a similar level of anger shown by Lendy investors in due course.
If you are a peer-to-peer investor and would like to tell us your story feel free to contact us.
Mouse in the Court 