Our regulator, the Financial Conduct Authority, requires all financial institutions to have a plan for an orderly wind-down should a regulated business cease to be in business. Without such a plan there could be consequences for lenders where loans were not monitored and interest and capital collected.
The previous solution was to have a ‘living will’ arrangement however the rules have been updated and, as of 09/12/19 each company is required to have a ‘Winding Down Plan’ and a P2P Resolution Pack’. These documents are aimed at allowing a business to wind down in an orderly fashion with the least impact possible on lenders and the funds they have loaned to businesses.
Our wind-down plan includes:
If our company was to decide to wind down the business
In the circumstances of an orderly wind-down Ablrate’s FCA permissions would remain and the loan book would be wound down over a period of time.
Should the company need to be wound down by a third party then our wind-down plan includes;
(a) arranging for another provider with the relevant FCA permissions to operate our platform in order to wind down the loan book in an orderly fashion over time;
We will inform lenders here who that supplier will be and important information such as their client money arrangements. These arrangments will be at least the standard of Ablrate where monies are held in a segregated client account under an acknowledgement letter from the bank. This letter confirms that the monies held in those accounts do not form part of the company’s assets and belong to the customers of the platform.
(b) Information as to how that third party servicer will be remunerated from running the loan book down. In the case of Ablrate we have a model that relies on a fee from the borrower each month which is derived from the rate the borrower is paying for the loan minus the rate the lenders are receiving for making the loan.
(c) Information on staffing requirements in order to manage the orderly wind-down and an assessment of costs of the wind-down in various scenarios.
(d) In conjunction with the P2P Resolution Plan there are instructions on how to use the Ablrate technology efficiently and be able to provide timely and relevant information through the system.
Our primary goal in creating the wind-down plan is to give instructions to incoming standby service providers that would enable them to wind down the loan book in an efficient and cost-effective manner.
If Ablrate ceases business;