Quote Originally Posted by Tony Two Gloves View Post
I wonder what would happen with this if Finance Direct folds, just had a look at their accounts for the year and they aren’t making any money. Who checks them on the quality of loans they put up and if desperate would they push harder when it’s the investors that lose? I have no money with them now but think I will avoid
I looked at this a year ago, and interesting to see there FY20 results are breakeven.

Theres a few things to look at in the financials. Financial Direct holds approx 1 million in cash, its able to sustain a certain amount of loss. Operating cash flows are positive, and they made a profit in FY19. So there could be some accounting adjustments in there, maybe the adoption of IFRS16 or an increased bad debt provision.

The loans (P2P product) are ring fenced, via the FMA. And there is the requirement that Lending Crowd arrange an alternative provider in the event of receivership. It does bring the question, if that were to occur, who would pick up the book in this market. But at least the regulations are in place, to afford levels of protection.

Finally you could consider past performance, Finance Direct made it through the GFC, if I understand correctly their lending is typically secured.