What happens if the rebuildingsociety.com platform stops operating?
rebuildingsociety.com intends to continue to grow its P2P platform and offer lenders the full risk and reward of SME lending. However, we must consider what happens if there are circumstances that cause us to cease operations.
As a regulated peer-to-peer lending platform, we’re required by the regulator to maintain an ‘orderly wind-down arrangement plan’. This is essentially the plan that sets out how your funds and investments would be managed to ensure the least disruption to you.
What Might Cause Us to Need to Initiate the Plan?
- Reduced levels of trading, to the point where it is inefficient for the platform to continue trading.
- External legal challenges
- Regulatory factors
- Unlike most other platforms, we’re profitable! We have leveraged three assets to generate additional income. So we are not solely reliant on the completion of new loans for our revenue.
- Our technology is licensed through a sister company White Label Crowdfunding Limited, with 5 clients paying ongoing license revenues.
- Our compliance department has deep knowledge and expertise in P2P lending, so we selectively offer to provide compliance services to Appointed Representatives, the firm currently has 3 clients.
What is the Plan?
As a network principal and given our relationship with our sister company White Label Crowdfunding Ltd our team already has experience in efficiently winding down three P2P platforms.
Depending on the circumstances, we may either:
- Cease taking new registrations and lender credits and initiate a reduced service which would see the platform operate much as normal, but would simply focus on ensuring all outstanding loans are repaid according to the loan schedule and original loan terms.
- Sell the loan book to another lending company. In this scenario, the sale of the loan proceeds would be used to repay lenders their capital in existing loans, and return any unpledged available funds to lenders directly.
What does this Mean for Lenders
In the event of needing to initiate the wind-down plan, lenders would still be able to access the platform as normal, but unable to make any new loans or credit new funds.
Lenders would still be able to:
- Withdraw available funds
- Access their dashboards and information on previous and outstanding loans
- Access their tax statement information
- Contact the platform either via email or phone.
Operating Clauses in Lender Contracts
We do not envisage the loan agreements or lender terms to which you are party to, to be affected by the need to initiate our orderly wind-down plan.
We may assign our interest in the loans to a servicing agent, if required, and borrowers will still be obliged to repay their loans to you under the original terms of their contracts.
All unpledged lender funds are kept in a segregated client account with Barclays Bank PLC, separate to company funds as per regulatory requirements on the management of client money.
Risks to the Plan
In developing this plan we’ve engaged extensively with our senior management team, board and external advisors about the effectiveness and suitability of the plan. However, there always is the risk that assumptions made in the development of the plan do not suit the particular circumstances presented at the time of needing to act on the plan.
Potential risks to the plan may include:
- Insufficient funding to facilitate the costs associated with debt collection over the lifetime of the loans outstanding. Our current estimates of other revenue income to rebuildingsociety.com shows as more than sufficient to execute the plan and recovery of loans.
- Services in a wind-down might need to be provided by a company that does not have the same regulatory permissions as ourselves and so the protections currently enjoyed by lenders may vary.