FCA has written a Dear CEO letter to loan-based P2P crowdfunding platforms asking them to review their wind-down arrangements. It has recently carried out a sampling exercise which it says strongly suggests that some firms are falling short of the standard it expects. It is particularly concerned about:
- systems and controls around wind-down, including the need for firms to develop bespoke scenarios of when their business would no longer be viable and identify what would be necessary for an orderly wind-down. It says firms do not appear to be identifying and monitoring the necessary triggers, so it is hard for FCA to see that they would know when to invoke their wind-down plans. It is also worried that firms have not considered the tax implications of a wind-down;
- how firms will fund their plans. FCA does not feel firms have properly considered how they would meet the expenses of a wind-down, especially where their business models area based on up front income which will fall away; and
- how firms will ensure that any third-parties who form part of the wind down plan have the proper regulatory permissions to take over relevant parts of the business.
FCA now plans to ask certain firms to provide details of their revised plans, after they have considered the letter.