The Lendy Collapse: The Future Of Peer To Peer Lending

After months of uncertainty, Lendy finally collapsed at the end of May. Indeed, the court ruled that the British lending company has to go into administration as of 24 May 2019. The Financial Conduct Authority (FCA) placed the company under investigation in early 2019, a move that has culminated in its recent downfall.

Lendy’s failures are likely to have severe ramifications for its investors. For starters, it has an approximate outstanding loan of £160m.

According to the company’s website, creditors will have to wait for further information as nothing can be decided right now. However, all indications point towards many of them losing their money.

Peer To Peer Problems

While Lendy’s collapse may be the biggest and most significant in the peer to peer lending industry, it is not the first. Recently, one such company from Poland known as Eurocent was liquidated after failing.

Even closer to home was Collateral UK, which suffered the same fate. All the evidence points towards a trend that could be cropping up in the industry.

Given the volatile nature of the peer-to-peer lending sector, one might wonder why it is even still popular. Indeed, the industry has massively grown since the collapse of the global market around one decade ago.

Banks could not offer loans to small businesses or individuals at the same rate as before, and so someone had to step up. Some of the companies promised customers high returns on investment, and that is incentive enough for the regular person.

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