A financial regulator in the UK is looking into Lendy, a peer-to-peer lender, to discern if the lending company can meet the standards required to regulate firms.
Lendy, which allows retail investors to fund property development loans, was put on an FCA watchlist in January, according to documents seen by the Financial Times and three people familiar with the situation.
The company, its creditors and the regulator are working to shore up the business and collect on its overdue loans. But if the business were to fail, it would be the largest collapse of a European peer-to-peer lender in the sector’s short history.
The regulator told Lendy it had concerns about its ability to meet parts of its “threshold conditions” — the minimum standards required of all regulated firms. It had questions about the company’s business model, leadership and financial position.
Under the terms of the watchlist, Lendy is subject to enhanced FCA oversight and must provide the regulator with detailed updates including a weekly report on cash flow and loan recovery efforts.
Some 55 per cent of Lendy’s outstanding loans are considered “non-performing” or have been only partially repaid and are subject to claims by its collections team, according to analysis of its loan data. A further 10 per cent are past due but not yet considered to be in default.
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