In UK, P2P Firm Seeks Help from Regulators

In the United Kingdom, a peer-to-peer (P2P) property lender has taken what the Financial Times called “the unusual step” of asking a regulator for aid amid a legal dispute.

The financial publication reported that Lendy, the P2P firm, and several of its investors have been threatened with a 10 million pound lawsuit from one of Lendy’s largest borrowers. The threat of legal action comes as almost two-thirds of the company’s borrowers have failed to make timely loan payments.

The appeal to the Financial Conduct Authority came via a letter from Lendy, which has said that a borrower has accused the company of “unfairly giving notice” on its loans and for not arranging for further financing in line with contracts. The case also would involve another 5,000 investors, who in turn lent more than 8 million pounds to offshore accounts tied to a family trust in the British Virgin Islands, and had been slated to develop a residential project in London.

The developments between Lendy and the borrower, said the publication, may trigger what might be seen as “the first big crisis” amid Europe’s P2P industry, which in turn has been trying to dissuade regulators from imposing stricter regulations on the sector.

Lendy, for its part, told the FT that the investors In the aforementioned loan the loan had been informed and that “this type of dispute is fairly common between lenders and borrowers” and added that a  “skilled recoveries team acting in lenders’ interests.”

Lendy told the FCA that “the situation is novel and is unfolding on a day-to-day basis, hence our urgent request” for a meeting to enlist the regulator’s “support.”

The FT had noted that Lendy has cited returns of as high as 12 percent on its loans, but the publication had added that the company has seen growth in bad loans on the books and a slide in profits. Non-performing loans are stated to be 12.3 percent, but FT has said that of a 180 million pound loan portfolio, 112 million pounds were “outside” terms, or at least one day overdue. Loans under company management have declined 3 percent through the current year.

In reference to one Liverpool residence, an 11 million pound Lendy loan may be recoverable by only as much as 62 percent, said the FT.