FS Brexit update

Yup, its a balanced piece with good insight. I hadn't really considered the Scottish and NI angle on this before. Far better than emails from other platforms I'm invested in, which have either been silent or dumbed down to the level of "don't you worry your pretty little head"

Update on Brexit


We were all taken by surprise at the result of Thursday’s referendum. Over the last few days we have taken stock of the situation to assess how this impacts our platform.


In simple terms, we don’t believe there is a significant impact. Our largest fear was always that interest rates would have to rise to prop up a falling £, which could trigger a decrease in property prices – which might have an impact on the value of security held.


That, now, does not appear to be an imminent threat. Statements from Mark Carney and George Osborne would suggest that they have sufficient tools at their disposal to manage through the immediate turbulence. Former Bank of England governor, Lord King, said yesterday that there was no reason for people to be particularly worried. A number of experts are predicting declining interest rates. Indeed, some believe the falling £ presents buying opportunities for overseas investors. Regardless, the fundamentals of the property market are that there is insufficient housing, with demand outstripping supply, and we cannot see how that would be impacted in the short, medium or long term.


We have seen no obvious change in the reaction of investors to our platform. If anything, we have seen an increase in net deposits, largely coming from overseas investors no doubt taking advantage of what they believe to be a temporarily cheap £. As an overall proposition, our platform represents a relatively safe haven during these times of stock market volatility. Our loans secured on gold and jewellery will almost certainly be safer. The price of gold has already risen by 5% as measured in $.


We might see a slowing down of deals as property developers pause for a while, although, interestingly, the majority of our borrowers were wholeheartedly in support of Brexit. But we suspect that, once the turmoil in both political parties settles down, and the negotiation process starts, deal flows would return to their pre-referendum levels.


In terms of securities held, we already have systems in place to ensure we comply with legal and security requirements for investors- whether they are within UK, EU or outside. As we only lend to borrowers in the UK the only possible effect would occur if Scotland or Northern Ireland decided on a different approach. As all of our loans are for 6 month terms we would have plenty of opportunity to close out any loans if we felt they would be untenable due to any changes in the structure of the United Kingdom.


From a financial position, FundingSecure has never been stronger. The company has built up its own reserves and is well placed to ride out any shocks. We don’t plan to change our lending policies other than, perhaps, being a little more cautious on property valuations – at least in the short term.


Without getting into the debate as to the pro’s and con’s of Brexit (our Directors were split in terms of how they voted!), we are all agreed that the doomsday scenarios will probably not materialise, that the settlements and treaties negotiated with Europe and the rest of the world will come as a pleasant surprise, and that the spirit of the British people will ultimately overcome.



FundingSecure