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P2P firms – have you thought about your wind-down arrangements?

March 12, 2019

What’s the issue?

The FCA have published their latest ‘Dear CEO’ letter, targeting P2P firms and their wind-down arrangements. They have asked firms to review their wind-down arrangements and to ensure that adequate processes and procedures are in place to effectively administer and execute P2P loan agreements in the event that the platform cannot carry out this function any longer.

The background behind this latest update stems from FCA observations that current platform arrangements are inadequate and falling short of the regulatory requirements, following a sample review of firms as part of their supervisory work.

Who does it impact?

This update from the FCA is relevant to all P2P lending firms, who should assess their current procedures to ensure that they are adequate and reflective of the relevant requirements.

Not meeting these requirements could result in:

  • Customer detriment with a loss of capital and/or interest;
  • supervision/enforcement action by the FCA;
  • further assessments and discussions with the regulator; and
  • reputational, legal and financial repercussions for both the firm and individuals within the firm holding controlled functions.

What do you need to do?

The FCA have broken down the requirements into keys areas, including:

1. System and Controls

i) Having adequate systems and controls relating to wind down involves making arrangements with another firm. The firm should also notify lenders of the arrangements in place.

ii) Having a policy document incorporating examples of scenarios that may induce the firm into winding down is key to organising the process efficiently.

iii) The firm should also have a strong governance system in place.

2. Platform Funding and Remuneration Models

This aspect centres on platform funding and renumeration models and, in particular, how the wind down plan will be funded. Firms should be able to demonstrate how they would pay a third party to undertake this service.

How can Thistle help you?

If you are concerned about this update, please get in contact for an initial chat to see how we can assist in becoming compliant. Thistle has a proven track record in providing expert compliance advice for P2P firms and we can ensure you meet the regulatory requirements. This could include using our draft policies, policy plan development, arranging living will services, drafting due diligence documents, building out a full wind down process with you or updating the one you already have.

Along with this our sister firm, Resolution Compliance, are one of the few living will service providers in the industry and can help build and implement a service where arrangements are made to continue executing the payments of the P2P loan book, should the P2P lender be unable to do so.

Contact us today on or call 0207 436 0630.