New court date set for Funding Secure fee dispute
FundingSecure investors are facing yet another court hearing regarding the priority order for repayments, despite a recent legal victory over the platform’s fee structure.
The collapsed peer-to-peer lending platform was technically owed a five per cent redemption fee on on each loan, which is mentioned in its terms and conditions.
FundingSecure had argued that the fee should be paid on the entire value of the loan, before payment to investors. However, a representative group of investors were able to provide proof that the platform had indicated – both in its terms and conditions and in investor correspondence – that investor capital would be prioritised.
In March, a judge ruled that investor capital should be the first to be repaid, followed by investor interest, and then FundingSecure’s five per cent redemption fee.
But CG&Co, the administrator of FundingSecure, revealed in a progress report for the six months to 22 April 2021 that there were still “consequential matters” following the judgement.
It is unclear what these are but this could hold up any payments.
Another court hearing has been set for July 2021 and CG&co said it was working with the creditors committee on the issue.
The report revealed that the administrator recovered £6.5m in the six month period, taking the total realisations to £23.4m.
There are still 95 remaining defaulted loans to recover with £47.7m invested but there is no indication of when this will complete.
Read more: FundingSecure administrators recover £23.5m as fee dispute continues
“It is not possible to provide an estimate for dealing with these, in particular property assets, due to the pandemic and the ability of administrators to take certain actions,” CG&Co said.
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.
CG&Co was appointed administrator of FundingSecure in October 2019.
The administration period has been extended for three years until October 2023 as CG&Co said recoveries would take longer due to the pandemic.