Peer-to-peer lender Collateral (UK) Ltd. has fallen into administration after it emerged that it had been trading without a license, the Financial Times reported March 1.
The company, which offers pawnbroker-style and property-backed loans, shut down its website after going into administration Feb. 28, leaving investors unable to view their accounts or access their money.
Its administrator, Refresh Recovery, said Collateral was "operating in the belief that it was authorized and regulated by the U.K. Financial Conduct Authority under interim permission." It added that Collateral has not stopped trading but that it would not grant new loans or allow clients to transfer existing loans "until the company's position is clarified," the FT added.
"People close to the situation" told the FT that Collateral's permission lapsed in February. At the start of the month, the company inserted a clause on its website saying that customers would rank as "unsecured creditors" in the event of insolvency and would likely be unable to recover their funds. The company housed £21 million of investors' money, the report said.
The FCA said it is working with Collateral regarding the issue, the FT reported.
