UK peer-to-peer property finance company Lendy collapses

Interesting times ahead. Due to the wave of developers bankrupting, about £160M ( €180M or $203M respectively) as loans of retail lenders money is outstanding. 

Here's the full Financial Times article:

British property finance company Lendy has collapsed in the largest failure to date in Europe’s nascent peer-to-peer lending sector, amid an investigation by financial regulators.

Administrators at RSM were appointed by court order on Friday afternoon.

The Financial Conduct Authority said the appointment was made “following action taken by the FCA”, and said “there is an ongoing investigation into the circumstances that have led to this action”.

The Financial Times first reported concerns about rising default levels at the company — which allowed retail investors to lend to property developers — last autumn, and it was placed on an FCA watchlist at the start of this year, less than 12 months after it received an FCA licence.

The regulator had raised questions about its ability to meet the minimum standards required of regulated firms, but tried to work with the company and its creditors to avoid a collapse.

Their failure raises the prospect of tens of millions of pounds of losses for retail investors. Lendy has more than £160m in outstanding loans, of which more than £90m is in default. Several million pounds of loans more are behind on repayments, but not yet classed as non-performing

In an update posted on Lendy’s website, the company said it had “limited” information for creditors, and asked them to await further updates.

RSM said it was “working closely with the FCA”, and would outline its proposals to investors and creditors “in due course”.

The collapse and investigation comes as the peer-to-peer sector awaits an expected crackdown on marketing rules, after the regulator warned that many customers were being lured into high-risk products without fully understanding them.

The sector has experienced several high-profile scandals and collapses in the US and Asia, but only a handful of small companies such as Collateral, TrustBuddy and Be The Lender have encountered significant problems in Europe.

Peer to peer lending was encouraged in the wake of the financial crisis as a way to fill the gaps left by banks that cut lending to certain sectors, while providing an alternative source of income for savers hit by low interest rates. 

However, many early pioneers such as Zopa and Funding Circle have since attempted to move towards more traditional ways of funding their loans.