The biggest shocks of 2021
2020 brought the great shock of a pandemic but 2021 also served up plenty of surprises in the peer-to-peer lending sector.
From platform closures to international expansions, here Peer2Peer Finance News summarises some of 2021’s most unexpected events.
Zopa and Lending Works closing to retail money within a week of each other
Zopa announced on 7 December that it will close its P2P lending operations next month in favour of bank lending and seeking an initial public offering.
The following week, Lending Works placed its P2P lending business into run-off, citing changing market dynamics, Covid-19 and waning retail interest.
This follows FutureBricks leaving the retail P2P space for unregulated corporate lending earlier this year.
IFISA returns remained steady despite Covid
Innovative Finance ISAs returned an average of 9.01 per cent during 2021, showing platforms continued to deliver inflation-beating returns during periods of prolonged economic and stock market turmoil.
The exclusive data from Peer2Peer Finance News will be revealed in January’s edition of the magazine.
P2P lenders were recognised for the vital role they can play in supporting the economy
Platforms such as Funding Circle and Assetz Capital continued deploying funds under the government’s coronavirus business interruption loan scheme.
Then both were approved to deliver finance under its successor, the recovery loan scheme.
International expansion despite the pandemic
CrowdProperty launched in Australia, JustUs and its sister company Moneybrain are planning to launch in the US and EstateGuru said it was preparing to launch its first UK projects.
Additional FCA scrutiny and proposed new rules
The City watchdog wrote to P2P platforms to remind them of their responsibilities and air its concerns about secondary markets.
In May, the Financial Conduct Authority published a discussion paper on proposals to strengthen financial promotions on high-risk investments, including P2P. P2P platforms and the UK Crowdfunding Association criticised the proposals.
The regulator said it expects to publish a policy statement on high-risk investment rules next year.
New platform launches
A new pawnbroking and property P2P lending platform, Connective Lending, launched in February and in May set its sights on lending £1m by the end of the year.
In December, it was revealed the UK’s first directly authorised Islamic finance-compliant P2P lender, Nester, was set to launch.
The Kalifa Review’s impact
The Kalifa Review into fintech was published in February, which claimed that increased government support, growth funding and regulatory sandboxes could lead the UK to the top of the global fintech league table.
Since then Chancellor Rishi Sunak has implemented a number of the recommendations, including a new Centre for Finance, Innovation and Technology, the creation of a scale box and regulatory nursery to support start-up fintechs, and funding for digital ID initiatives.
Platform closures
In February, The House Crowd entered into administration and Octopus Choice permanently closed.
Business Loan Network, the winding-down P2P lending business formerly known as ThinCats, went into administration in April.
The Lendy Action Group won a legal victory
In August, The Lendy Action Group won its waterfall case against Lendy administrators RSM, with the judge ruling for model 2 (M2) investors to be given priority in distribution payments.
M1 investors are defined as creditors, meaning their eventual payouts will be pooled with other creditors, including the Lendy directors, while M2 are defined as investors, which means that they may be able to recover funds directly from the loans that they helped to fund.
The Buy2Let Cars arrest
In March, the companies behind car leasing provider Buy2Let Cars fell into administration. Then in April, one person was arrested and a second person questioned by police as part of a new fraud investigation into Raedex Consortium, the parent company of defunct lending platform Buy2Let Cars.
The arrest came after the Serious Fraud Office launched an investigation into Raedex Consortium for running an unauthorised customer investment scheme.
Imran’s departure from the OBIE
The investigation found that the working environment created a real risk that discrimination, victimisation and harassment could occur and could go unchecked.
Former Innovate Finance chief executive Charlotte Crosswell took over as trustee and chair.