Financial Ombudsman complaint - response (FC)

Hi all,

6 months later and I've received a reply to my complaint to the Financial Ombudsman, copied below.

It isn't good news - has anyone else had any luck? Is there any further supporting evidence that can be supplied so it can be looked at by an ombudsman rather than an investigator. 

Thanks,


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Thank you for your patience while we've been looking into your complaint. I've now finished my investigation and, based on the information available to me, I don't think that Funding Circle have treated you unfairly.



I understand this isn't the response you were hoping for but I've explained why in more detail below.



Your complaint



You’re unhappy that Funding Circle have amended their terms and the way their secondary market operates.



You’re also unhappy that they introduced a 1.25% selling fee.



My findings



I think it would be helpful for me to start by going back and explaining a few principles. When agreeing to lend money to a business or individual through crowdfunding you also agree and commit to lend this money for a set term. Some platforms such as Funding Circle have put in place secondary markets that allow investors to sell their loan parts to other investors in order to withdraw funds before this set term. But to be clear, there is no regulatory requirement on platforms to have this facility available. And it follows that there are no rules dictating how these secondary markets should be run. In addition, our service isn’t a regulator. So we can’t ask businesses to change their procedures or internal processes.



Bearing the above in mind, I’d still expect Funding Circle to treat their consumers fairly. So when looking into your complaint, I’ve taken into account Funding Circle’s terms and conditions in order to decide whether this was the case in your situation.



Section 16 ‘Amendments’ of Funding Circle’s terms and conditions explain that they may make amendments to their terms. So I’m satisfied they were entitled to do this. It might also be helpful for me to add that this isn’t something unusual either.



This section also says that Funding Circle would usually give you a minimum of 1 month notice of any changes. The information I’ve received shows you received notification of the change of terms on 30 October 2019. The new process came into place on 2 December 2019. So I’m also satisfied that they complied with the terms of the agreement here.



Funding Circle terms explain ‘You can withdraw available funds that have not been lent or allocated for lending from your Investor Account. If you want to have access to any funds that have already been lent, you may be able to transfer your Loan Parts by selling them to other Investors’. It then says that you can do this using their selling tool.



Funding Circle have explained that – under the previous terms – they saw that queues were getting longer. This is part of the reasons why they decided to make changes to their selling tool – and introduce a 1.25% transfer payment.



Using the new selling tool, investors who want to have access to their money early can transfer their loan parts on a rolling basis where each request is active for 120 days. After this time has elapsed, investors receive confirmation of the amount of money made available from the sales of loan-parts – and repayments received during that time.



The terms also say ‘There is no guarantee that any of your Loan Parts will be transferred, nor any assurance as to how long it may take to transfer Loan Parts to other Investors’.



On that point, as I’ve explained before, in order to withdraw your funds, you first need to find investors willing to buy your loan parts. And although Funding Circle have put a facility in place to allow you to do this more easily, they can’t control whether there’s sufficient demand from other investors – nor can they control how long this will take as it’s completely outside of their hands.



I appreciate Funding Circle used to provide updates on average selling times and this is no longer the case. However, the terms don’t say this is something they will do. As this isn’t a requirement, then I can’t say they should continue to provide the average selling time on their platform.



I think it’s also important to note that, during the time your loan-parts are listed on the secondary market, you still accrue interest on the loans. So you don’t lose out financially in the meantime.



I appreciate your concerns around the new 1.25% transfer payment introduced. However, this acts as a discount to potential buyers. And it’s not a charge that Funding Circle receives.



As I’ve said before, we’re not a regulator so we can’t ask businesses to change their processes. But taking into account the fact that, under the old terms, queues were getting longer, I think it’s reasonable to say that that the new terms would likely act as an incentive to potential buyers. And, in turn, give investors more chances to sell their loan parts – and quicker.



Having considered the new terms, I can see that you still had the option to take back the loan parts at any time if you weren’t happy to sell them under the new terms. As a result of this you would’ve resumed being bound to the loan agreement – and term length – you had previously accepted. So I think you had options available if you weren’t happy with the new terms and conditions.



Taking into account the above, I don’t think that Funding Circle have treated you unfairly.



Next steps



I think this is a fair outcome in the circumstances, for the reasons I’ve explained. But if you decide that you don't accept what I’ve said, then please let me know by 4 June 2020.



If I can’t resolve things then an ombudsman here can look at everything again and make a final decision. If I don’t hear from you by that date we might not be able to look at your complaint again.