P2P Money Blog

The Financial Conduct Authority have published a press release detailing their involvement with Collateral in Administration.  The FCA confirmed that they should have been consulted and were required to give approval when an administrator is appointed.  This is to ensure that the administrator acts in the best interests of the investors (in this case the lenders).  As this did not happen the FCA applied to the high court to replace the current administrators.

The full press release is published on the FCA website and a summary is below:

On 16 March 2018, the FCA made applications to the High Court in Manchester to appoint new administrators in respect of Collateral (UK) Ltd (Collateral UK), Collateral Sales Ltd and Collateral Security Trustee Ltd (together, the Collateral Companies). The Collateral Companies had been placed into administration by their directors on 28 February 2018.

The Collateral Companies operated a peer-to-peer lending platform through a website (collateraluk.com) and Collateral UK Ltd purported to hold an interim permission from the FCA to carry on regulated activities. In fact, none of the Collateral Companies held any valid authorisation or permission to carry on regulated activities. When challenged by the FCA, the Collateral Companies agreed to cease their lending activities and, on 26 February 2018, the lending platform became inoperative.

The Collateral Companies were required to obtain the approval of the FCA when appointing an administrator. This is designed to protect investors by ensuring an independent person conducts the administration in the best interests of the investors. This did not happen. Accordingly the FCA has intervened to ensure investors are protected as the law requires.

On 16 March 2018, the High Court adjourned the FCA?s applications to 27 April 2018. Until then, the Court ordered that, barring incoming payment of loan interest and repayments and certain other administrative steps, the substantive progress of the administration should be paused.

The FCA will continue to work in the best interests of investors in the Collateral Companies. The case will return to the High Court in Manchester on 27 April 2018.

Full story »

A report to creditors of Collateral (UK) Limited in Administration has been published on Financial Thing.  The document is dated 23rd March and details the events around the administration of Collateral.  This has been discussed in detail on the P2P Independent Forum.We have been in contact with the Administrators concerning this report and they have stated:

The report does seem to be one drafted by our office, but please note that this was not released by us.

The intention was for all investors to be provided with a formal report on the current position of Collateral (UK) Limited, however the FCA have advised that this report cannot be released. 

As this report is now in the public domain we can provide the following summary.  The report states that the FCA deemed that Collateral were operating an business without the required FCA permissions, and therefore requested that they stop trading.  At this point the directors of Collateral called in the administrators.  The report also states that the FCA are taking steps to remove the current Administrator.  While Collateral did not have the necessary permissions, the current administrators also not have the necessary permission to "Operating an electronic system in relation to lending" or control client money, which may be the reason why the FCA wish to step in.

The report does not appear to differentiate client funds and Collateral funds.  This is compounded by changes to Colateral's terms and conditions in February which was not advised to lenders, is causing some confusion.  Lenders were advised by the Administrators that they are not creditors, however it is unclear how interest and loans that have not been drawn down are to be treated.

It is worth remembering the P2P loans are made between lenders and borrowers, but the confusion comes in with the interest and unlent funds, and the security for the loans which are registered to one of the Collateral companies.

We have had the opportunity to interview Yann Murciano, CEO of BLEND, which launched in January 2018.  BLEND is a peer-to-peer platform that offer secured loans on property, typically outside the London bubble.  The LTV (loan to value) they have achived to date is around 50%.

What did you do before BLEND?

I was head of base metals trading at Morgan Stanley in London for 10 years. Prior to that, I was trading FX Options at ABN Amro in Chicago.

What motivated you to launch BLEND?

Being a trader, I always look for inefficiencies in the markets, and I spotted an inefficiency in the lending market whereby on the one hand SME property developers with good track record and experience were not getting access to the finance they needed to build houses, and on the other hand the UK is experiencing its worst housing crisis in decades due to the lack of houses.  So my first step was to do a detailed analysis of the lending market to map out all the information (lenders requirements, borrowers requirements, all the UK local markets, etc), then we developed our online platform (which is an electronic lending marketplace) which took about 12 months, then we did a soft launch in H2 2017 to test the model and ensure that all works well, and we finally officially launched in January 2018. We are very proud to have had a strong start and lent £1.7million across 7 loans since launch.

What do you see as the unique selling points of BLEND for both lenders and borrowers?

While we are not reinventing the wheel  of P2P property lending, we do believe that we bring to the table 3 strong unique differentiating point.  First, whereas most traditional lenders focus on the London market due to its convenience, we focus in less crowded markets outside London that are outperforming not only the London market but also the average UK market.  Second, our loans sit at the sweet spot on the risk/reward curve.  Third, we offer a user-friendly dashboard that enables users to manage their loans easily and efficiently (A), loans that sit at the top end of the P2P lending marketplace (B), and lots of transparency on each loan with detailed information (C) ? while several platforms offer A or B or C, not many platforms offer all three A, B and C like Blend Network does.

Can you tell us a bit more about some of the loans that will be coming to the platform over the next few months?

Unlike traditional lenders and other P2P platforms, we like to keep an open mind and look at the UK as a whole outside London.  So all our loans will be in high-growth areas outside London simply because we believe that by doing so we bring our lenders loans that sit at the sweet spot on the risk/reward curve.  So far we have delivered an average of 12.14% return p.a. across our 7 loans with average Loan-To-Value (LTV) 54%, and we aim to keep those numbers around there.  All our loans will be secured against the asset with first charge against the property and personal guarantee from the developer.

Where do you see BLEND in 5 years?

Well, Funding Circle just announced a £1.5bn IPO, so we got to better that in 5 years!

At Blend Network we are not trying to reinvent the wheel; we are simply offering an improved product for both lenders and borrowers. While we are not looking to be the biggest P2P platform out there, we are looking to be the best one in terms of:

• Returns - keeping our current position at the sweet spot on the risk/reward curve
• Customer experience ? continuing to enhance the functionalities on our platform to keep delivering top navigational and interface tools that our lenders love using
• Access to deals ? Continuing to source top deals for our lenders

We thank Yann and the team at BLEND for their time.

Zopa, the leading and original peer-to-peer lending platform, has offered a new pre-fund of ISA for the 2018/2019 tax year.  Below is a copy of the email sent to lenders today:

If you?re planning on putting money into your Zopa IFISA next year, you may be interested in our new ISA Prefund.

Invest now and be all set for the new tax year
We?ve heard from many of you that you?re interested in investing in a 2018/19 ISA when they?re available in April. This might lead to longer queue times, which means it could take longer for your money to start earning interest than it does at the moment.

With Prefund, you can take advantage of the short queue times today to invest in a non-ISA product. You?ll earn taxable interest right up until we convert your money, fee-free, into a 2018/19 ISA in the new tax year.

Put your feet up while we convert your funds to your 2018/19 IFISA
We?ll start converting prefunded money on 6 April, and we're aiming to have everyone's conversion completed in a couple of weeks. The actual conversion only takes a day, and you'll be earning taxable interest until yours starts.

We?ll keep you updated on progress every step of the way, so while we take care of your nest egg, you?re free to enjoy a chocolate egg or two!

Prefund from £5,000 to £20,000 in new funds by 18 March
The ISA Prefund window is open now.

Kuflink, one of the more recent peer-to-peer platforms which launched in May 2016, has announced a market leading cashback scheme.

We?re offering £100 cashback* when your friend invests a minimum of £200 via our platform.

The cashback offer can be accessed via this link:  https://invest.kuflink.co.uk/invite/IG-558

Most cashback offers require at least £1000 investment, and then would typically be around £50 cashback, giving a boost of 5% to the investment.  The latest offer from Kuflink provides a 50% boost to the investment, assuming you invest the minimum.  Lenders should always ensure they are sufficiently diversified on each platform, so we would encourage spreading the investment over a number of loans.

Ian Gurney, founder of the P2P money website said:

This offer from Kuflink is market leading and ideal for people willing to give peer-to-peer lending a try!

Terms and conditions apply, capital at risk.