On May 24 2019, the Financial Conduct Authority (FCA) announced that a peer-to-peer (P2P) firm had entered administration. The regulator also said it was examining the circumstances that have led to this action being taken.

Three employees of RSM Restructuring Advisory LLP are now effectively running the P2P firm and are also in charge at two associated companies – these two additional firms were not authorised by the FCA.

As of June 5, the firm’s website simply states that an update will be issued to its investors and creditors in the near future. The firm was a P2P investor engaged in crowdfunding loans secured on UK properties. Their loan book stands at around £160 million and it is estimated that the firm has some 24,000 creditors and investors, and also that £90 million of the loan book is currently in default. Trade publication Peer2Peer Finance News has previously reported that one borrower was seeking to sue the firm for £10 million, claiming that £8.2 million worth of loans were unfairly placed into default.

The administrators say they are seeking “to determine the optimal strategy to enable creditors and investors to receive as much back as possible and as soon as possible.”

The firm’s Frequently Asked Questions says that the main reasons behind the administration are:

  • Certain loans have not performed in line with expectations, with large numbers of late paying borrowers
  • The firm has been subject to FCA special measures since November 2018

In April 2019, a restriction was added to the firm’s listing on the Financial Services Register, stating that it may not “in any way dispose of, deal with or diminish the value of any of its assets and must not in any way release client money without in either case the prior written consent of the [FCA].”

The FCA has otherwise not gone public with exactly what its concerns over the firm are.

As is often the case with firms in administration, RSM are being cautious and not promising how much may finally be returned to the firms’ investors and creditors. However, their final losses could be substantial, as P2P investments are not protected under the Financial Services Compensation Scheme.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article