Moneything Administration – My Thoughts
** Updated December 31st, 2020 **
On December 6th, 2019, Moneything announced the winding down of its loan book and business closing its doors to new investors. This wasn’t a surprising announcement considering Moneything had many of its real estate loans in default and no new loans were being introduced.
On December 19th, 2020, Moneything announced their intention to appoint administrators over Moneything Capital Limited and on December 21st, 2020, Moorfields were appointed as Administrators.
Moneything’s defaults magnify some of the risks presented to lenders who invest in high interest-paying property-backed bridging and development loans. I predict investors’ will experience capital losses from some of the failed loans.
Read my comprehensive unbiased Moneything review below highlighting my experiences after more than three years of lending.
How Can I Contact Moneything?
UK Tel: 0800-066-3344
Questions from lenders and borrowers should be directed to firstname.lastname@example.org.
Specific queries for the Administrators: www.moorfieldscr.com/moneything
The Administrators can be contacted as follows:
Mail: Moorfields Advisory, 88 Wood Street, London EC2V 7QF.
Moneything Administration: What You Need To Know
What was Moneything?
Moneything was a UK based peer to peer lending company that specialised in property development lending. Moneything closed its doors and announced Administration in December 2020.
What Led To Moneything’s Voluntary Loan Book Wind-Down?
Moneything tried to remain competitive in the property lending sector but ultimately, loan borrowers were unable to refinance their loans. Moneything states this was due to Covid-19 but I believe Moneything’s issues began before Covid-19. Questionable loan selections led to several defaulted property and bridging loans which in turn led to a loss of investor confidence.
In addition, Moneything is involved in litigation with one of its borrowers. This ongoing legal battle has taken a financial toll on Moneything and has led to the Administration.
One of Moneything’s main borrowers is subject to possible fraud allegations as it removed assets used as security for loans. One of these assets was an exotic car that had been double financed. Not good.
In a recent loan recovery, only 20% of a multi-million £ loan was paid out to investors’ with almost 35% being taken in recovery fees. Moneything cited valuation mistakes as being the sole cause of such a poor loan recovery and while this may be the case, I question Moneything’s experience and due diligence process on this and other loans.
As with Collateral, Lendy and Funding Secure loans, I’m disappointed to see the flaws in Moneything’s loans.
What Does The Closure Mean For Lenders?
Moorfields (Moneything’s Administrator) has taken control of loan recovery and company wind down with the goal of returning as much money to lenders as possible.
Monething states on its website that “The administration is not expected to have a material impact on lenders”. This is a bold statement as other Administrations have been costly and have vastly affected lenders.
The Administrators will attempt to recover the capital from the loans Moneything has written.
The Administration means that a loss of capital is likely. Administration fees tend to be costly and loan recoveries have been minimal so far.
Ed Pearce (Moneything’s Founder) will continue his role and manage the Moneything platform.
How Long Will Administration Last?
It’s hard to say as we have seen Administrations lasts for several years. Recovery times depend on legal processes and borrower cooperations. I expect an Administration to last from two to five years.
Can I Get Compensation From The FSCS Like I Can From A Bank?
Unfortunately not as peer to peer lending investments are not covered by FSCS protection.
Can I Withdraw Money In My Moneything Account?
If you have a cash balance on your account, you can log in and request a withdrawal but there may be a delay as the Administrator takes control of the banking.
What About My IFISA?
Moneything claims there is little money left in IFISA’s as they were being run down throughout 2020.
If you have any loans in your IFISA, those loans will be treated the same as if they were in a regular account. If the loans are in default then the Administrator will attempt to recover the loan balances.
All defaulted loans have an update tab so you can keep up to date on the recovery progress:
Is There Anything Else I Can Do?
Other than contact the administrator there isn’t much else you can. Once loan recoveries are realised, you will hopefully receive some of your capital back.
What Is Moneything?
Moneything began as an online pawnbroker that used peer to peer lenders to finance pre-funded. Pawnbroking is an extremely profitable business and one I understand because my late father was a pawnbroker. This is partly why I decided to invest through Moneything even though it was a new platform and I considered it to be in the high-risk category.
Moneything moved away from the original pawnbroking loan model in favour of property and development bridging loans, grouped asset loans and stocking loans consisting of car hire purchase agreements, cars and debentures.
On June 16th, 2019, Moneything announced they would focus on less risky development loans which would pay between 7-10% per year instead of the standard 12% returns. Unfortunately, Moneything was never able to offer these loans, probably due to the ever-increasing competitive lender market.
When Did Moneything Launch?
Are they regulated?
Yes, by the Financial Conduct Authority #703549 under full permissions granted March 23rd, 2017. Investments made through Moneything are not covered under the FSCS (Financial Services Compensation Scheme).
FCA regulation is nothing like the FSCS, which covers consumers when they deposit money in banks. The FCA reports to the UK government and has the ability to pursue criminal action against companies which violate its standards and codes of conduct.
How Much Interest Did Moneything Pay Lenders / Investors?
Am I Lending To The Moneything Platform Or To Borrowers?
Loan agreements are directly between lenders and borrowers.
What Security Does Moneything Loan Against?
All loans are secured by items such as property, gold, cars, property, debentures, boats, electronics and planes etc. Loan To Values are in the 13-69% range. If the borrower defaults, Moneything or its loan partners can attempt to recover and sell the assets to recover lenders’ money.
What Is Moneything’s Default Handling Like?
I currently have seven property asset-backed loans that are in default and I expect to lose capital on these defaulted loans. On a positive note Moneything has previously acted in a timely fashion when loans became non-performing.
Some of Moneything’s default recovery results have been less than stellar. One property sold for approximately 50% of its RICS appraised value. This resulted in capital losses to lenders’. This loan took about 14 months to go through the recovery process.
Another loan that was put into administration was found to have subpar building materials resulting in significant remediation which means increased costs and probably less recovered capital.
Another defaulted loan was fully recovered in two weeks but I find this isn’t the norm and I expect the rest of the defaults to take longer to recover.
In April 2020, one defaulted loan resulted in a 20% net recovery for investors’ with possible planned further legal action against the borrower and the RICS valuer.
Moneything provides periodic default updates on the loan information pages.
Is There A Provision Fund?
What Happens If Moneything Goes Out Of Business?
This isn’t clearly explained on their website so I emailed Moneything. This was the response:
“There is a Deed of Assignment (DoA) in place for each loan on the MoneyThing platform. Each DoA contains a Schedule of all investments in that loan, the investor’s name and % they hold. This DoA then explicitly describes how the investors (as listed in the Schedule), have an equitable interest in the underlying security of the loan, the proportion being the % listed in the Schedule. The DoA also stipulates that the investor earns 12% (apportioned) annualised interest for the duration of the loan until such time as the borrower redeems or defaults (and the asset is disposed of to recover the capital & interest).
Thus, in the event that MoneyThing were to go ‘pop’, the administrator/liquidator would have access to these DoA (to be able to pass this onto someone to wind-down the loan book), but crucially that the security behind the loans could not be considered as part of the company assets.”
The Moneything Conclusion
Moneything started out with great potential but eventually fell victim to risky high-interest lending practices. Moneything’s closure was unfortunate as I believed the Directors had good intentions of providing a viable lending business. Unfortunately, questionable lending choices defaulted property loans, possible borrower fraud, litigation, Covid-19 and a loss of investor confidence led to Moneything’s closure and eventual administration.
Moneything’s closure once again highlights the risky nature of property bridging and development lending and how it’s imperative to ensure the companies you are investing through have high expertise in this area of lending.
Also, be sure to diversify your investment portfolio to avoid having all your investment eggs in one basket.
I’m hopeful that a responsible Administration wind-down will result in adequate recoveries of investors. I will be updating this page as new information is provided.
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** This unbiased review is for information purposes only and should not be considered investment advice. Opinions expressed in this review are based upon my investing experiences. All information was deemed to be correct at the time of writing. Peer to peer lending contains risks so never invest more than you can afford to lose. **