Serial failings at the FCA

Peer-to-peer lending was one of those new-fangled ideas which emerged from the wreckage of the financial crisis.

The internet offered tech-savvy entrepreneurs with money to lend the opportunity to earn decent returns in an era of super-low interest rates.

But the more we learn about the operation of the companies that matched lenders with borrowers, the less confident we can be about their viability.

The City regulator, the Financial Conduct Authority, has a huge amount on its plate with the London Capital & Finance minibond scandal and the damaging implosion inside the Woodford fund empire.

That is no excuse for taking its eye off the ball with peer-to-peer lending. We have now had two major casualties in the sector – Lendy, which went into administration in May of this year, and Funding Secure, which called in administrators in October.

What they both show is a sector which lacked the skills to do the proper due diligence on the people and firms they were lending to, and which expanded too fast without the FCA intervening.

The lack of attention can be contrasted with the way in which the FCA, together with the Bank of england, moved swiftly to head off Metro Bank when it reported loans incorrectly. The administrators’ presentation to creditors in Funding Secure shows it was anything but the name on the tin.

The report found significant failings, with the assets including several rooms full of Italian books now in storage at a substantial cost.

Lendy and Funding Secure have cast a huge pall over the sector and raise big questions about the quality of supervision.

These firms may not be licensed in the manner of the banks, but those who trusted their savings to them will have assumed that the FCA had their backs.

Whatever the outcome of the election, the Treasury needs to rethink the role of the

FCA. It is gallantly still struggling to achieve closure on dozens of cases of wrongful behaviour dating back to the financial crisis. But its ability to deal with these and keep track of the latest scams has been found wanting.

The best thing that chief executive Andrew Bailey could do now is to compose letters to the Chancellor and the Treasury Select Committee urging reform.

These should be on the desks of current or new occupants as soon as this miserable election campaign is over.

Sky surfing

AS THe story goes, the chairman of Comcast, Brian roberts, was so taken with Sky technology when he visited an outlet at the Westfield shopping centre in west London that he decided to buy the company.

The concern was that, like so many overseas takeovers, Comcast would suck the lifeblood out of Sky, transferring its technology to its Philadelphia campus and leaving Britain’s most successful creative company to wither.

Comcast has taken the axe to some of Sky’s peripheral digital operations on the grounds that revenues are not meeting targets. In the past that has not been the Sky way.

Nevertheless, it is hugely encouraging that the Sky arm of the roberts empire is to develop a new studio at elstree with the aim of becoming europe’s leading film production centre with 14 stages.

The rise of Netflix and Amazon as production houses and the move of Disney into streaming have called for strong responses from the rest of the sector.

Comcast plans to invest £3bn in facilities and promotions and deliver the new material via its NBC Universal channels and Sky. It is delivering a vote of confidence in creative Britain at a time of fragility.

It is the kind of success that the Tories should be celebrating.

Film noir

STILL in the creative sector, Cineworld recognises it has a problem. The big question is, can its policy of turning movie houses into more luxurious emporia work in the digital age?

With short-sellers in command, management clearly is worried and has brought in Goldman Sachs to assist.

But the runes are not good. The decision of Netflix to give Martin Scorsese’s film The Irishman the shortest of runs on the silver screen before transferring it to subscription viewing could be a straw in the wind.

Cineworld already has its work cut out making the debt-ridden, £2.4bn takeover of regal work.