Peer-to-peer lender Funding Secure has entered administration leaving 3,500 customers facing an uncertain future.
The lender facilitated crowdfunded loans for the purchase and development of property, as well as pawn-broking style loans secured on items of value.
It is understood that the Funding Secure loan book currently stands at around £80m with the accumulated loan book representing approximately 486 investor loans from circa 3,500 investors.
According to the Funding Secure website the lender had lent a total of £305,796,810, however it is unclear when this figure was last updated.
This is the latest high profile administration this year following on from fellow peer-to-peer platform Lendy’s demise.
Jonathan Avery-Gee, Edward Avery-Gee and Daniel Richardson of CG & Co have been appointed as administrators.
In a statement on the Funding Secure website CG & Co said:”The company’s difficulties have been documented online and 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.
“In addition, the business has not been able to demonstrate to the FCA that it can continue to meet the Threshold Conditions” necessary to continue conducting regulated activities.
“The rationale for the appointment of the administrators is that there is a real risk that liquidation would fundamentally damage the value of the company’s assets (by adversely impacting on the recoverability of the company’s loan book) and undermine the potential return to investors and creditors.
“Management believe that liquidation would lead to the cessation of key operational IT systems (essential to the operation of the online account system for client funds operated by the company) and the loss of key staff which would may be detrimental to the asset realisation process and increase the costs of recovery activity.
“In light of these issues the director decided to place the company into administration and the FCA provided their consent to our appointment as administrators.”
Andrew Hosford, director of Voltaire Finance, expressed his disappointment at the news but warned that this could be the tip of the iceberg.
He said: “It is never nice to see any business enter administration and this is clearly going to be a difficult time for investors who will be concerned about the funds they had with Funding Secure.
“However the peer-to-peer sector is looking to be on increasingly rocky ground at present. Unfortunately one can’t but help to feel that this was inevitable and, more worryingly, that there will be more failures to follow.”
Funding Secure had been offering returns of up to 16%pa according to its website.
And according to Companies House the firm saw an exodus of directors earlier this month with three resigning on 15 October.
Last month the Financial Conduct Authority sent a seven page letter to peer-to-peer lending firms warning them the industry must clean up poor practices or face a “strong and rapid” crackdown.