The FCA’s new rules in respect of the Peer to Peer sector become effective from the 9 December. The FCA guidance places a specific emphasis on the wind down planning and procedures in place by platforms. This appears specifically relevant in view of the recent failure of Funding Secure.
Historically the rules and regulations in respect of standby and wind down arrangements were relatively liberal with the emphasis on management teams being satisfied that their arrangements were suitable and appropriate. However, the recent failures in the sector coupled with the FCA’s review of current standby arrangements has highlighted significant discrepancies and limitations in arrangements. Consequently, the FCA has provided guidance on the specific requirements they expect to see in standby arrangements.
Platforms and institutions will be aware of these requirements, but key questions they should ask themselves in respect of their existing arrangements are:
- Will our standby arrangements survive an insolvency event?
- What is the timeline to an invocation and what would the impact of delays on the overall asset recovery be?
- Are our bespoke operating systems compatible with our standby servicer?
- Does our standby servicer have the skills and resources to step in to manage my business?
- Is the wind down strategy sufficiently funded?
At RSM we have designed a standby service specifically designed to assist alternative lenders and peer to peer platforms. The service is focused on providing a non-invasive, but effective standby service, thereby fulfilling the key FCA wind down regulations. The focus on an accelerated invocation, utilisation of existing systems, coupled with our proven experiences ensures that we believe it provides the best option in maximising recoveries and minimises the negative effects of a wind down.
RSM’s standby service is currently in place with a range of peer to peer platforms and alternative lenders, currently c£2b of assets are supported by RSM’s standby arrangements.