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Britain’s financial watchdog has lamented and apologized for a “failure” in which hundreds of people lost millions of pounds invested in fraudulent peer-to-peer lenders.
The Financial Conduct Authority has responded to more than 300 parties who complained about poor oversight of Collateral, admitting it was a “missed opportunity” and saying it was “too late” to shut down the company after discovering wrongdoing. ” he said.
In an email to complainants, the FCA said: “We apologize for the FCA’s mismanagement in relation to its dealings with Collateral and the distress and inconvenience this has undoubtedly caused you.” I will,” he added. .
“Losing a large amount of money can be very upsetting and cause significant anxiety and frustration,” the report said. “We would also like to apologize for the time it took us to respond to your complaint. We acknowledge the inconvenience this may have caused.”
The FCA said it failed to discover any unauthorized changes to details about Collateral on the register of licensed businesses for two years, and only shut down the peer-to-peer lender several months after discovering the fraud.
The watchdog has offered to pay £700 in compensation to collateral investors who complained about non-compliance with regulations.
This is the latest serious breach by the FCA in recent years. Last year, the company issued a “heartfelt apology” for taking so long to shut down failed payments company Premier FX.
In 2020, Andrew Bailey, the former FCA chief who now runs the Bank of England, apologized to investors who suffered losses from his mini-bond issuer London Capital & Finance.
FCA also apologized for a botched press conference in 2014 that caused the life insurer’s share price to plummet.
Collateral was founded in 2014 but did not receive the necessary regulatory approvals to operate as a peer-to-peer lender that brokers loans between individuals and businesses on its online platform.
However, in 2015 one of the directors fraudulently swapped the name of another company (Regal Pawnbrokers), which had been authorized as a lender but had agreed to the sale, with the name of the security on the FCA’s public register. .
The FCA, which took over consumer credit regulation in 2014, became aware of the fraud in November 2017. But it was only two months later that regulators ordered Collateral to cease trading, and the company continued to accept funds from investors for several weeks, only for the company to fall under control in the final stages. February 2018.
The watchdog said the delay partly reflected “the risk that an immediate suspension of operations could lead to a disorderly failure and harm investors.”
Brothers Peter and Andrew Currie, who ran Collateral, were sentenced to five and a half years in prison and two and a half years respectively in July for fraud and money laundering.
The company’s administrators estimate that around £11m of the £17.9m customer loans outstanding at the time of the collapse will not be recovered, and investors have since returned some of their money.
