P2P wind-downs that have worked
The Financial Conduct Authority (FCA) has urged regulated firms to improve their wind-down plans, particularly when it comes to managing cashflow.
It has released a thematic review warning of “significant further work” required on wind-down strategies.
The ongoing administrations of collapsed peer-to-peer lenders such as Lendy and FundingSecure have shone a spotlight on how prepared the sector is for shutdowns.
But there are some positive examples that show P2P platforms can be shut down smoothly.
Not all are technically wind-downs.
For example, Zopa, Lending Works, RateSetter and Funding Circle have all in recent months and years said they would exit the P2P lending market but have remained open in various guises.
Lending Works and Funding Circle are running off their books until loans are repaid.
Here is how some of the P2P lending closures that have gone completed and gone well so far.
Zopa
The world’s oldest peer-to-peer lender announced in December 2021 that it would close to retail investors in the new year.
It is instead focusing on its banking brand.
To help with the smooth closure of the P2P side of the business, Zopa Bank purchased the P2P loan portfolio and customers received their balances by the end of January.
RateSetter
RateSetter was acquired by Metro Bank in September 2020.
It took over all consumer lending and then in April 2021, Metro Bank purchased the legacy loanbook, which repaid and closed P2P investor accounts.
Growth Street
P2P business lender Growth Street entered a solvent wind-down in July 2020, after the Covid-19 pandemic made it harder to secure the funding needed to sustain the platform.
All investors funds were repaid by the end of April 2021 and the platform entered liquidation.
Orca
Orca started life as a P2P research firm, launched an investment platform in 2018 and an Innovative Finance ISA (IFISA) in 2019 that invests across a range of P2P platforms.
It announced in April 2020 that it would close, blaming regulatory changes and a shift in market sentiment.
The platform entered a solvent liquidation two months later with £56.027.49 in the bank.
BondMason
Direct lending investment service, BondMason Core, previously allocated investor funds to property-backed and peer-to-peer loans but shifted to buy-to-let investment portfolios in 2019 amid concerns of a drop in interest rates.
It has been in wind-down and focused on repaying investors since, with 107 per cent of investor funds now repaid.
The online account system is due to be closed at the end of June but all funds will be sent to allocated accounts.