Collateral trial: Investors say apparent FCA approval drove decision
Investors in collapsed peer-to-peer lender Collateral – including a fund which put nearly £200,000 into the platform – told a jury that they only invested because they thought it was authorised by the City regulator.
It is alleged that the Curries falsely told investors that Collateral was authorised by the Financial Conduct Authority (FCA).
Furthermore, a company with the name Collateral appeared on the FCA register with interim permissions, which the regulator claims happened after a director fraudulently changed an unrelated company entry.
The Curries each face one charge of fraud by false representation, one charge of fraud by abuse of position and one charge of converting criminal property. They deny any wrongdoing.
A report by the Mouse in the Court blog on the criminal trial of former Collateral directors Andrew Currie and Peter Currie said that the jury at Southwark Crown Court heard statements from a number of investors who explained how their belief that the company had FCA authorisation played a part in their investment decision.
Sandra Snowdon, a retired chartered accountant, reportedly said that all of the emails that she received had the statement about Collateral being authorised and regulated.
“I wouldn’t have invested at all if I’d known that they were operating without regulatory permissions,” she said, according to the Mouse in the Court report.
“If I’d thought that Collateral weren’t authorised by the FCA, I wouldn’t have entered into any agreement with them.”
Another investor, company director Stephen Tooley, said that he “drew comfort from the fact that Collateral claimed on the website and at the bottom of every email “Collateral (UK) Limited is authorised and regulated by the Financial Conduct Authority.”
Read more: Collateral damage: A timeline of the administration
Ivan Zhiznevskii, who was director of an alternative investment company called 3S Investments, also provided a statement for the jury.
3S Investments put £196,352 into Collateral’s platform. When the website shut down in 2018, he said the total invested in loan parts was £17,924.
He told the jury that he met with the Curries with a view to investing in Collateral back in 2017 and discussed the regulatory status of the platform as well as the firm’s loan book, according to the Mouse in the Court.
“At the time of us joining, Collateral appeared to be a rising star of P2P lending,” he said, noting the company’s “attractive yield” and an “opportunity to diversify at a strategic level”.
He said that Collateral stated on its website that it had interim permission from the FCA and that the actual lack of authorisation would have had “a fundamental effect on our decision to invest.”
Collateral collapsed into administration in February 2018, amid uncertainty around its regulatory status.
As Peer2Peer Finance News reported that month, the three limited companies listed on the Financial Services Register that had traded under the name of Collateral had not had regulatory permission to operate as a consumer credit business for at least 11 months prior and had all been dissolved.
Furthermore, Collateral (UK) Limited, which was cited on the platform’s regular loan updates to investors, could not be found on the Financial Services Register at all.
Around 1,000 investors had put more than £15m through Collateral before it fell into administration, the FCA claims.