1.UK – AltFi
AltFi runs an opinion piece looking at the various reviews if P2P and alternative investments now being conducted.
“The crowdfunding industry has spent 2019 preparing for the FCA’s new crowdfunding rules, but in the background, after two platform failures in the bonds and P2P space respectively, a series of reviews have been launched which will look into the industry and their impact shouldn’t be underestimated. Firms shouldn’t underestimate the scrutiny to be placed on them as these reviews are undertaken.
In January 2019 London Capital & Finance (LCF), an FCA-authorised firm that was alleged to be mis-promoting mini-bonds, was put into administration by the FCA. LCF used 25% of investors’ funds to cover marketing commissions and invested the remainder into projects that failed to produce an adequate return - 14,000 investors have lost in excess of £236m.
Adding to the confusion, there is no accepted definition of a mini-bond and the FCA applies the term broadly. One can draw a distinction between non-transferable and unlisted bonds (mini-bonds, the promotion of which is unregulated), and transferable, unlisted bonds (Crowdbonds). This is important because LCF was a regulated firm but undertaking the unregulated activity of promoting mini-bonds. However, there are FCA regulated firms who promote Crowdbonds and these firms are likely to be caught under a review into the retail bond market providing angst for both firms and investors.
Shortly afterwards the collapse of LCF, P2P property platform Lendy was also put into administration. As a recent article commented, Lendy demise is controversial because it’s alleged the FCA was aware of issues before granting Lendy authorisation and many investors feel misled as a result.”
2. UK – AltFi
A compliance consultancy closes down.
3. UK – P2P
Lendy’s investors discover that the administrators are asking for more than £1 million in fees.
4. US – FinTech
Crowdfundinsider runs a preview of a crypto executive’s testimony to the US Senate Banking Committee ahead of the Libra launch.
5. International – FinTech
Austria’s BitPanda surpasses one million users.