The FSCS does not cover the insolvency of marketplace platforms. Lending companies like CrowdProperty, which are regulated by the Financial Conduct Authority (FCA), are required to protect investors’ money in several ways if the platform was to fail.
- Investor funds that have not been lent to borrowers are held by us in individual, segregated investor wallets.
- These funds are completely separate from CrowdProperty’s own money and we cannot use client money for our own business purposes.
- These funds do not form part of our assets, which means that they would not be available to creditors in the event of our insolvency.
- Client funds are ring-fenced, each held in individual accounts, in accordance with the FCA’s Client Money Rules.
As an FCA regulated firm, we have a backup servicing arrangement in place. This means that in the unlikely event that CrowdProperty ceases to trade, the back-up service provider would take our place in operationally managing and administering existing loan contracts between investors and borrowers. It would continue to receive loan repayments from borrowers, and to process and distribute these payments to investors. In practice, if a platform does fail, all of investors’ existing loans would be unaffected.
The first legal charge that we take out on all property projects on our investors’ behalf would still stand if CrowdProperty became insolvent. This would continue to safeguard investors’ money and keep it secured against the asset, so that if a project developer were to default on repayments, the back-up service provider would operate on our investors’ behalf and take over the project to attempt to pay back investors’ capital and interest.