FCA apologises to Collateral investors with £650 payout
The Financial Conduct Authority (FCA) has apologised to investors in defunct peer-to-peer lending platform Collateral and made an offer of compensation.
Collateral went into administration in March 2018 after it emerged that the firm was operating without the correct regulatory permissions.
Collateral’s directors were able to fraudulently change details about the firms’ public entry on the FCA’s interim permission register, which made it look as though the firm was permitted to undertake consumer credit activities.
In 2016, Collateral applied for full authorisation from the FCA. Despite the FCA’s involvement with the firm at this point, Collateral’s fraudulent registration activities were only discovered by the FCA in January 2018. At this point, the FCA notified co-director Peter Currie that it had uncovered the register change and ordered that Collateral cease unauthorised business.
Read more: Curries convicted in Collateral fraud case
However, following this intervention, Collateral not only continued to receive investments but directors Peter and Andrew Currie also removed approximately £750,000 from the Collateral client accounts.
At around the same time the Curries appointed, without informing the FCA as required, an administrator and transferred a further £88,000 from Collateral funds.
“Opportunities were missed, during this process, to identify that the firm did not hold a valid interim permission and that the interim permission register was incorrect,” said an FCA spokesperson.
“Once the FCA had knowledge of the issues, it did not act promptly enough to tell the firm to stop regulated business and to correct the register.”
More than 300 complaints were made to the FCA from Collateral investors who were misled by the false registration details and disappointed in the regulator’s dealings with the firm. The FCA has acknowledged that these failings included an inability to maintain the correct information on the register and a failure to alert investors when the regulator became aware of the incorrect information.
The FCA has invited all affected parties to reach out to receive an apology. The regulator has also offered payments of £500 to anyone who invested in Collateral “in recognition of the contribution to the distress and inconvenience caused by the FCA’s errors”, as well as £150 for delays in complaints handling.
Read more: Collateral brothers sentenced to prison as FCA starts compensation proceedings
The regulator has set up a dedicated complaint form which Collateral investors can use to receive their compensation. It will be available until 31 March 2025.
“While the fraudulent actions of Mr and Mr Currie were the cause of Collateral investors’ losses, we recognise we could have acted faster,” said Stephen Braviner Roman, general counsel and executive director of legal, risk, compliance and corporate governance at the FCA.
“For that we apologise.”
In May 2023, the Curries were convicted of fraud following a five-week trial. In July 2023, the directors were sentenced to eight years in prison for their role in the fraud.
Read more: Collateral investors face new legal hurdles to FCA compensation
