RSM administrators appointed by Lendy

05 June 2019 3 min. read

Peer-to-peer loan company Lendy has fallen into administration, prompting an investigation from the UK’s financial ombudsman. The firm has appointed the restructuring practice of RSM to oversee proceedings, having crashed with hundreds of millions of pounds in loans still outstanding.

The Financial Conduct Authority (FCA) has been cracking down on various aspects of the loan market in recent times. In 2018, controversial pay-day loans company Wonga collapsed into administration after the market watchdog brought in new regulations and a price capping regime, clipping the wings of the previously limitless segment.

Now, another aspect of the lending market is set to come under the FCA’s scrutiny, having first emerged in the crisis period of 2008. Peer-to-peer lenders sprung up in the wake of the financial crisis as high street banks pulled back from small business lending, fearing defaults. As these digital lenders took the place of established banks, critics argued they were under competitive pressure from backers to make loans in order to grow their balance sheets, which could lead to poor quality lending to firms which are unable to pay back their debts.

RSM administrators appointed by Lendy

This may well have contributed to the news that the FCA will be forced to examine why peer-to-peer loan company Lendy has fallen into administration. Lendy, which operated a lending platform facilitating crowd-funded loans which were then used to fund the purchase and development of property, was authorised by the watchdog just one year before. That came after the regulator conducted a detailed end-to-end assessment of its business and operating model.

As reported by City AM, Lendy still has outstanding loans of more than £160 million, and more than £90 million is in default, despite having announced it had more than 21,500 investors last July. Less than 12 months on from its authorization, the FCA has had to impose an asset restriction on Lendy following its collapse, and will now conduct a thorough investigation into the events which led to this point. The FCA register reportedly shows the asset restriction it has imposed requires Lendy to not "dispose of, deal with or diminish the value of any of its assets" or "release client money without in either case the prior written consent..."

The Portsmouth-based business, launched in 2012, is now being handled by joint administrators Damian Webb, Phillip Sykes and Mark Wilson of RSM. The same administrators have also been appointed to Lendy Provision Reserve and Saving Stream Security Holding, which have collapsed alongside the rest of Lendy.

An update from RSM on the platform’s website confirmed, “The administrators are working closely with the FCA who consented to their appointment… Due to the early stages of the administrations, the information we have is limited, we therefore request that creditors continue to consult the website in the first instance.”

Chaired by Charles Randell, the FCA is set to publish new rules in the next two months to clamp down on peer-to-peer sites. According to the Sunday Times, the regulator aims to give investors an “appropriateness” test before they hand over cash, and could cap the amount lent at 10% of their savings.