Wind down plan
At Abundance, we are looking to grow our business and provide more opportunities for people to have a positive impact with their money. However, circumstances can change and commercial or economic conditions may impact our business and result in a change in strategy, or even result in Abundance going out of business. We therefore plan for all eventualities to make sure that the investments you make on Abundance are taken care of in the event we decide, or are obliged, to stop operating our business.
Summary of the plan
Each of your investments on Abundance involves you lending money to a company or council. You have a right to receive payments under the terms of your investment, and that remains the case even if we decide we are no longer able to operate the Abundance platform.
As a firm regulated by the Financial Conduct Authority (FCA), Abundance must demonstrate how it ensures the investments are administered to their full term and limits any impact to investors. Abundance has a wind down plan in place that sets out how Abundance would manage the orderly wind down of its business and we are required to hold an amount of capital in reserve to support this wind down.
Our plan sets out how we would expect to downsize our business significantly and focus on the administration of our existing investments only until they have all matured, using the revenues we receive for administering the investments through to their end to cover our costs. This would likely involve closing the Abundance platform to new investment opportunities and reducing the functionality of some of the Abundance platform while maintaining investment returns and withdrawals to investors. Our plan allows us to maintain the core elements of our business including our regulatory status and our client money account while each of your investments is concluded.
Where Abundance has implemented its wind down plan, any cash held in your Abundance account at the time and any funds paid into our client money account over the course of the wind down process by the companies or councils you have invested in, would continue to be held in a segregated client money account operated under the existing CASS permissions of Abundance Investment Ltd. We would automatically return any money you hold in our client money account where we hold up to date bank information for you.
As an additional backup, in the event that Abundance was unable to conduct an orderly wind down itself, Abundance has contracted a backup service provider who would step in and administer the outstanding investments. Our current backup service provider is global restructuring advisory firm, RSM Restructuring Advisory LLP. Our contract with our backup service provider allows them to step in and take over the administration of the outstanding investments while maintaining the regulatory status and client money permissions of Abundance Investment Ltd.
While our wind down plan has been designed to ensure an orderly wind down of our business and limit the impact to you and your investments with us, there are always risks. Our assumptions may turn out to be incorrect or the operating conditions we find ourselves in may be significantly different than we expected if our plans are ever tested in practice. Our plan mitigates some of these risks, however you should be aware of the following risks to the administration of your investments:
- We receive an ongoing revenue from the administration of our existing book of investments. Our forecasts predict that this revenue is sufficient to wind down all of our investments to maturity, but should our forecasts be wrong, there may be insufficient funding to pay for the costs of administering your investments through to maturity. We have appointed a backup service provider to step in and administer the investments to mitigate the risk in this scenario.
- There is a risk that the administration of investments made through Abundance could be disrupted if Abundance became insolvent or our wind down plan is implemented. In particular, the services offered by Abundance or our backup service provider may be reduced and some of the features of the Abundance platform may end. In some situations the marketplace may be closed which would significantly reduce the liquidity of your investment.
- Where services are provided by another organisation such as our backup service provider, this may affect the regulatory protections you have where their permissions differ from Abundance’s. Our understanding is that based on the permissions of Abundance and those of RSM (our current backup service provider) there should be no change to your regulatory protection during the wind down process, however it is possible that this could change.
- If Abundance’s business were to cease, your rights to money held in our client money account would only relate to any uninvested cash you have in your Abundance account at that point. Your rights to future payments from your investments which have not yet been paid into our client money account would not be covered.