Funding Secure blunders shock administrator

Administrators of bust online lending platform Funding Secure have been stunned by ‘significant failings’ which allowed loans to be secured against a bizarre range of hard-to-sell assets.

Funding Secure was a peer-topeer lender which matched 3,500 investors who wanted to lend money to businesses and property developers.

These borrowers were asked to pledge valuable assets as security against the loan. If they defaulted, and failed to repay the debt, these assets could be sold to return the cash back to investors.

But poor practices at Funding Secure meant millions of pounds of loans were secured against inappropriate assets, the Mail has learned. In one case a loan was secured against a library of 5,000 Italian books. The collection had received wildly different valuations – between £760,000 and £6m.

The borrower has defaulted, meaning Funding Secure’s administrators are trying to sell the tomes, but UK auction houses are understood to be unwilling to sell them.

On its website, Funding Secure, which lent out almost £306m of investors’ money following its launch in 2012, said loans would be secured against assets such as jewellery, classic cars, fine art and yachts.

According to a presentation seen by the Mail, prepared for creditors and investors by the administrators CG & Co, 80 of the 242 loans active were secured against these types of assets. Those 80 loans had a total value of £8m. The remainder, which had a value of £72m, are secured against property.

Of the 242 active loans, 167, worth £64m, were in default.

Funding Secure collapsed into administration in October, bogged down by litigation. Investors now have an anxious wait to see how much of the £80m they lent will be returned. The administrators found there was a ‘significant failure to properly manage all client account funds’.

CG&Co declined to comment last night.