Peer-to-peer lender Funding Secure goes into administration – what you need to know
Peer-to-peer lender Funding Secure has gone into administration with CG Recovery Ltd appointed as administrator – here's what you need to know.
Funding Secure, which described itself as one of the "country's most established peer-to-peer platforms", had about 3,500 investors, who are now waiting to hear how much of their money they will get back.
It's the second P2P platform to collapse in the last few months, after Lendy went into administration in May.
For more on how P2P works, including a full breakdown of the risks, see our Peer-to-Peer Lending guide.
What is peer-to-peer lending?
Peer-to-peer lending websites are industrial-scale online financial matchmakers. With no banking middleman, investors who put up cash for lending can get rates much higher than from a savings account, while borrowers often pay less than with a conventional loan. The sites themselves profit by taking a fee.
But investing your money this way is NOT like traditional saving, as there's no savings safety guarantee and you could lose your money. It may also be hard to get your money out early and your cash may not be lent straightaway, so you may get no interest for a while. See a full list of risks.
Why has Funding Secure gone into administration?
On Funding Secure's website, the administrators have said "investors are aware that certain loans have not performed in line with expectations in addition to the issues caused by the fraud-related litigation in which the company has become embroiled".
The administrators also say the business has not been able to demonstrate to regulator the Financial Conduct Authority that it can continue to meet the conditions necessary to continue conducting regulated activities.
I'm a creditor/investor – will I get my cash back?
It's too early to say how much money will be returned to creditors and investors, according to the administrators, and when any payments will be made to them.
The administrators say they will continue to evaluate the situation and keep people informed. They have set up a dedicated email address for creditors to contact the administration team at firstname.lastname@example.org.
The activities of P2P firms are not covered by the Financial Services Compensation Scheme, so investors won't be able to get money back through this.
I'm a borrower – should I continue to pay back my loan?
The Financial Conduct Authority says that borrowers continue to be bound by the terms of the loan agreement facilitated by Funding Secure, and to contact the administrators with any questions.
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