News Briefing - Crowdfunding, SME And Alternative Finance

A peson work on a laptop, with others around them

1.UK – P2P / Real Estate

The story of Lendy’s difficulties is all over the media. The firm has entered administration following action taken by the FCA.

Lendy has over £160m in outstanding loans with more than £90m in default.

CityA.M. has a good take.

The Financial Conduct Authority's announcement is here:

 

2. UK – P2P

FT Adviser looks at P2P as an asset class.

“Imagine an asset class where investor returns have been overwhelmingly positive every year since its inception and incredibly stable, hovering around the mid-single digits, without the rollercoaster of the stock market.

Imagine that this industry was born of an older one, previously closed to retail investors, that had provided proven, stable returns to institutions for many decades, even during the great recession, and other crashes and blips.

Then imagine that a casual comment from the Financial Conduct Authority calls investments in that industry “high-risk”.

This actually happened just a few weeks ago, when the FCA emphasised the difference between cash ISAs and Innovative Finance ISAs by referring to the latter as “generally high-risk” in a short comment.

To many risk-averse individuals with savings, any amount of risk above bank savings is going to feel like high.

The statement might have had in mind some specific types of higher-risk, higher-reward lending offered by some niche platforms, although the same could be said of ‘adventurous’ unit trusts and open-ended investment companies, or many DIY share portfolios.

It is not unhealthy to have sub-sectors of an asset class that go up the risk scale. (emphasis added by Another Crowd.)

Perhaps instead the FCA comment was referring to investor understanding of basic steps to reduce risk, none of which are new to the realm of investing strategy.

Most importantly, it means diversification because not all lending is equal, not all platforms are equally good at what they do, and investors do not benefit from identical portfolios and returns.

It could simply be the FCA recognises the wrapper of an Ifisa is not conducive to encouraging diversification without additional communication, because some non-advised investors might open one Ifisa and put all their lending capital into it, rather than spread across other wrappers and non-wrapped investment accounts.”

3. UK – FinTech

 

A paper from the Oxford Law faculty on FinTech-related matters.

“In our new working paper entitled ‘The Future of Data-Driven Finance and RegTech: Lessons from EU Big Bang II’ we argue that 2018 marked an important point in the evolution of finance: a Big Bang of data driven finance in Europe. In particular, MiFID II, GDPR and PSD2, focusing respectively on financial and trade reporting, data protection, and open banking were implemented in Europe. While designed separately, these three regulatory reforms are triggering a transformation in finance and its regulation in the EU. The impact however extends far beyond the EU. First, these reforms have three important elements of extraterritoriality so their impact has reached around the world to all those dealing with finance and data in Europe. Second – and more significantly – countries around the world are grappling with questions of how to regulate finance, technology and data and their increasingly interwoven nature.”

4. UK – AltFi

 

This tale has been covered by several outlets since the alert posted on Friday morning. This, from the Mail, takes it as far as any other.

 

“A former High Court judge will probe the City watchdog over its failure to stop a savings scandal.

Dame Elizabeth Gloster has been asked to examine why the Financial Conduct Authority did not protect customers from collapsed firm London Capital & Finance.

LC&F went bust earlier this year owing £237million to 11,500 customers, and is facing a fraud probe… 

 

The Treasury has asked former High Court and appeals judge Gloster to look into the allegations, and the rules could be tightened up to stop it happening again. She has been given a year to look at what happened.

FCA chairman Charles Randell said: 'This investigation will establish what happened with LC&F and whether further changes are required.”


5. UK – AltFi

 

The BBC website carries a written story that complements Friday’s You And Yours radio programme.

6. International – AltFi

 

 Crowdfund Insider on developments in the Swiss market.