- Consumer credit providers (in particular, high and medium cost short term credit, guarantor lenders and rent-to-own lenders) continue to face challenges arising from allegations that past affordability assessments failed to meet regulatory standards. This issue has been amplified by the fact that claims management companies have shifted their attention from banks (i.e. PPI claims) to consumer credit providers, driving up administrative costs and increasing redress liabilities.
- Several lenders have therefore considered using a Scheme of Arrangement as a tool to compromise mounting existential redress liabilities, with two leading cases (Amigo and Provident) achieving different results at Sanction. This perhaps narrows the scope for using Schemes in the future, but they remain a viable rescue tool for businesses with genuine liquidity and solvency issues.
- In addition, following a number of high-profile insolvencies the FCA has increased its focus on solvent wind down plans, and is seeking to:
- Expand the perimeter of firms required to have SWDP; and
- Ensure that SWDPs are robust and implementable. In our experience, smaller single regulated firms (such as consumer credit providers) can sometimes lack the resources to produce SWDPs to the FCAs required standards, but our dedicated SWDP team can support firms through this process, freeing up management time to run the business.
- Engaged by the FCA to perform a loan book provisioning review of a UK HCSTC lender and to perform a cash flow and balance sheet solvency assessment of the lender and associated businesses.
- Concluded that the lender was insolvent and retained to advise the FCA in relation to its strategy and communications with the lender and to review management reports for the FCA.
- Firm ultimately concluded that it was insolvent and took pre-emptive action to file for administration.
Options Assessment/Pre-pack Admin
- Instructed to advise RTO retailer on options including M&A and wind-down/collect-out of its debtor book, as part of which we regularly reviewed the company’s solvency and ability to trade in light of cash constraints.
- Although our M&A process identified significant interest in the business, no offers were received for the Company’s shares, so a sale was ultimately implemented via a pre-pack administration, preserving jobs and providing continuity for consumers/borrowers.
Scheme of Arrangement
- We were engaged company-side to provide advice regarding a proposed Scheme of Arrangement in relation to a market leading provider of personal loans to sub-prime borrowers in the UK.
- Due to legacy affordability complaints, the firm was facing a mounting and existential redress liability. Our work focussed on assessing:
- The prospects of the scheme being approved (including the position of the FCA),
- The relevant alternative, and
- The implications on the Group if the scheme was not approved.
Details of the entity providing services, legal and regulatory information in respect of the Teneo entity are also included in our engagement letters.
Teneo Financial Advisory (DIFC) Limited is authorised and regulated by the Dubai Financial Services Authority for the provision of Advising on Financial Products or Credit and Arranging Credit or Deals in Investment services
Specific information relating to our regulated entities which provide services to clients is detailed below:
|Registered Name||Legal Form||Registration Location and Reference||Registered Office||Data Protection||Regulator(s)||Professional Indemnity Insurance|
|Teneo Financial Advisory Limited||Limited Company||England & Wales, 13192958||5th Floor, 6 More London Place, London, SE1 2DA||UK - ZA920639||The Institute of Chartered Accountants in England and Wales (“ICAEW”) C008873136. All insolvency practitioners are licenced by the ICAEW. ICAEW Designated Professional Body licence for a range of investment business activities.||Details of the professional indemnity insurer can be provided on request.|
|Teneo Securities LLC||Limited Liability Company||USA - Delaware||280 Park Avenue, 4th Floor, New York, NY 10017||N/A||Financial Industry Regulatory Authority (FINRA) #151256. Securities and Exchange Commission (SEC).||Details of the professional indemnity insurer can be provided on request.|
Teneo Securities LLC’s Business Continuity Planning
Teneo Securities LLC has developed a Business Continuity Plan (“BCP”) on how we will respond to events that significantly disrupt our business. Since the timing and impact of disasters and disruptions is unpredictable, we will have to be flexible in responding to actual events as they occur. With that in mind, we are providing you with this information on our BCP.
The Firm has developed and installed a BCP in the case of any business disruption that causes the Firm to have limited or no communications with its employees or customers. Our plan anticipates two types of business disruptions, internal disruptions which affect only our Firm’s ability to do business (such as a fire in our building) and external disruptions that prevent the operation of securities markets or other firms (such as natural disasters or acts of war).
The Firm intends to stay in business during both internal and external disruptions due to the fact that the Firm employees can conduct Firm related business from alternate off-site physical locations and the Firm maintains an alternate location for the maintenance of its books and records. We anticipate that the Firm will recover from internal business disruptions within 24-48 hours. An outage due to an external business disruption may be longer and is beyond the control of the Firm. However, the Firm will endeavor to resume business as soon as it is possible for the Firm to establish business operations from alternate off-site physical locations.
The Firm’s BCP specifically addresses the following areas related to Firm operations:
- Data back-up and recovery (hard copy and electronic);
- All mission critical systems;
- Procedures to test and determine the Firm’s ability to do business (i.e., financial and operational assessments);
- Alternate communications between customers and the Firm;
- Alternate communications between the Firm and its employees;
- Alternate physical location of employees;
- Critical business constituent, bank, and counter-party impact;
- Regulatory reporting; and
- Communications with regulators.
If you have questions about our business continuity planning, you can contact us (212) 886-1600.