Funding Secure hits the news again

You are quite correct there were so real howlers but they amout to a tiny % of total.

To keep mentioning them is of no value the are consolidated in the statistics 6.8% overall loss.

Yes some poor ill advised folk may have put a disproportionate into a failed loan but that should not attract disproportionate negativity.

Some (not you) want to join the folk that like to blame victims of fraud for making the mistake even with sophisticated fraudsters out there.

This months see new recognition by the banks that always screamed "Gross negligence" when someone gave info to sophisticated fraudsters and never compensated them. Have now to recognise it is not always the defrauded persons fault.

P2P platforms can still fall prey to fraudsters (As do ALL businesses) Without it being there fault

Agree with the above - also I would say FS have a duty of care to expect and prevent fraud.
The art loans fiasco does not strike me as anywhere near excusable - the chap simply sold the (our) paintings as he knew damn well FS had nothing but nothing as security. 
Of course he sold the damn things as he had nothing to lose except OUR money.

  If he had commissioned very good fakes and swapped them over after experts had validated the original ones then I may have some sympathy although additional security should have been taken but I just can't see signs of any valid security that was taken. I have written off 100% of my 6 loans - prove me wrong FS but in the meantime I am totally appalled and don't expect me to be sorry for you.

FS are not carrying out their contractual promises as outlined on their website at the outset of a loan.
They pledge to us as lenders:
Background checks on all borrowers
Rigorous assessment by highly experienced staff of all projects prior to agreement to fund.
Property valuations undertaken by Independent Surveyors
Due diligence on ownership and title.
Monitoring progress of projects prior to the release of tranches of funding.

This is the basis of our contract with them and essential elements in the minimisation of risk of loss of capital.

Not one of the above took place on the Knaresborough loan for £725k in early 2016.

Information which was in the public domain at the time the borrower applied to them to access our money was either not known to them or ignored. The borrower had only months before gone into insolvency owing £32 million. He provided and forwarded to FS all three highly overinflated valuations of his property and those of two others to be used as collateral. Because of the scale of his debt at the time he applied for our funds through FS, he did not in effect own these properties. In these circumstances it was indeed only a matter of time before he was due to lose all three properties.

When he was declared bankrupt several months later, the house eventually sold for only £1.75 million instead if the £4.25 million his, not Funding Secure's independent valuations, (which were not done), said it was worth. The £725k of lender's capital and linked interest was therefore lost. One of the other properties used as collateral for this loan has still not been able to be sold to mitigate the loss as there appear to be queries about title.

This risk was wholly predicable with the smallest amount of due diligence and these circumstances should have been known to FS. Once the loan defaulted and the house was up for sale I was quickly and easily able to find the above infornation about the borrower as it was in the publuc domain. Had I known these background circunstances, there is no way I would have invested in this loan.

FS had clearly not undertaken their legal and contractual obligations or shown any duty of care towards us as their investors.

FS's assertion that their terms and conditions outline their lack of resposibility for investors' decisions should not absolve them from undertaking their contractual due diligence which is the basis of our legal contract wih them. Especially since the due diligence which we as investors are able to undertake on the background to the borrower of any loan and the location, title and value of property used as collateral is very limited due of data protection regulations.

This loan should never have been approved by FS. A level is risk is accepted and expected in the peer to peer business but such a high level of breathless recklessness with investor's money is completely and utterly unacceptable from a company who have FCA and IFISA approval.

I am therefore glad to see that the practices of FS are now coming to the attention of the public and applaud this journalist's article.

The new information posted above may well be accurate, but please don't blindly assume it is.
One of the first statements in the post is that FS claim they do checks on the individuals involved, but they didn't in this case. It was my understanding that FS were clear that they DON'T do checks on individuals and instead only check the secured asset. If such a simple misunderstanding of the FS business model is at the beginning of the argument then of course we should verify the rest of it too, rather than just agreeing because it suits our own suppositions.

If things were so obvious then as stated on all platforms you do your own DD you would not have lent any money. Again baseless accusations of professional valuers. If they knowingly gave inflated valuations then they loose their livelihood. What incentives do you think 3 valuers were given to loose their jobs as you say this is so obvious. 

There is NO incentive for platforms to knowing take on dubious loans they would only get bad press and make no money.

Since there losses are 6.8% their failures are reasonable considering the number of factors and legalities that can affect the markets they work in with property loans.

Any proof you have should be presented to the police and the professionals registration bodies and not just alluded to here.

Property is treated as any other asset . When you want to sell something to anyone or borrower against it all the lenders needs to know is it worth what you want. I don’t care who offers the asset as long as they have proof of ownership and it gets valued within the normal variable amounts for the sale of property.

The only problems are we accept valuations at market values or GDV and not the lowest distressed values. We are told this for every loan  that this is the risk we knowingly take.
As has been pointed out there would be little or no incentive for borrowers to borrower at this lower rate as they would have insufficient funds to carry out projects.

The valuations are then a matter of professional judgment by appropriate individuals licensed and insured.

In the long term I would agree but in the short term one could argue the platform is boosting its loan book and getting our money...as mentioned elsewhere the main losers when a loan goes bad are we lenders...


neither do I unless they have a track record of being dodgy but numerous assets have had incredulous valuations - let me think of  one, Wimbledon, Whitehaven1, Whitehaven2, Barnsoldwick, Knaresborough, NI turbine,Formby, C*****house, Speedboats, Mobile Homes 6 Yachts etc etc etc etc etc...