Crisis at the FCA: Major Blunder with Peer-to-Peer Lender

The British financial regulator Financial Conduct Authority (FCA) publicly expressed its regret over serious deficiencies that led to investors suffering millions in losses through a fraudulent peer-to-peer lender, Collateral. More than 300 affected individuals received an acknowledgment of failures from the FCA, particularly in response to the company's unlawful activities. The regulatory authority admitted there were missed opportunities and that it was too slow to react to Collateral's misconduct. In an email, the FCA expressed "sincere regret" over the losses incurred and the associated difficulties. It also apologized for the lengthy processing time of complaints, which may have exacerbated the victims' distress. The agency also acknowledged that several years passed before the fraudulent changes to Collateral's entry in the public register were discovered and the company was eventually shut down. As compensation, the financial authority offered £700 to investors who had pointed out regulatory deficiencies. These new admissions fit into a series of previous apologies from the FCA. Last year, it admitted to delays in closing the failed payment company Premier FX. Back in 2020, then-FCA head Andrew Bailey, now Governor of the Bank of England, apologized to investors of London Capital & Finance, who had suffered losses with minibonds. A bungled press briefing in 2014 additionally led to a slump in life insurance prices. Collateral was founded in 2014 under the false pretense of having the necessary regulatory approvals. A director of the company manipulated registry entries in 2015 and misused Regal Pawnbrokers’ approval to legitimize Collateral. The FCA did not notice the fraud until November 2017. Two months later, the company was ordered to cease trading after it continued to accept investor funds, eventually collapsing in February 2018. The regulatory authority justified the delays with the risk of an uncontrolled shutdown. Brothers Peter and Andrew Currie, who ran Collateral, received prison sentences for fraud and money laundering this year. The firm's insolvency administrator estimates that around £11 million of the outstanding £17.9 million loans are lost, although investors have temporarily recovered some of the funds.