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Funding Circle Ltd says it is authorised and regulated by the FCA (FRN 722513).
But this is where the wording can mislead.
“FCA authorised” is a trust badge - and it often gets heard as “this loan is FCA regulated like a bank product.” The FCA itself warns against that mental shortcut: FCA authorisation is permission for specific regulated activities, and FCA-authorised firms can also offer products and services that sit outside the FCA’s remit.
Crucially, the FCA explicitly lists “commercial mortgages and lending” as products/services it does not regulate or supervise. So in SME lending, “FCA regulated” can function as legitimacy signalling even when the actual loan relationship (and what happens in recoveries) is not regulated in the way most people assume.
The practical rule is: don’t rely on the badge. Check what permissions actually apply to the service you’re receiving - and what protections you do (and don’t) have.
No.
Funding Circle Ltd is FCA-authorised as a lending platform operator, but it is not a bank and it is not covered by the Financial Services Compensation Scheme (FSCS).
That matters because “FCA regulated” can sound like “bank-level protection” - but business lending and Personal Guarantee enforcement do not come with a deposit-style safety net.
Funding Circle is structured as a platform and servicer. The actual lender can be an institutional investor or an SPV (a special-purpose vehicle) used for warehousing and securitisation.
In practice, this can make it hard for borrowers and guarantors to form a clear mental model of who they are really “in contract” with - until something goes wrong.
Funding Circle’s core product is largely unsecured SME lending.
In that model, the Personal Guarantee is often the real “security” behind the loan: if the company fails, the claim can move to the directors personally.
That’s why a business failure can quickly turn into a personal crisis.
Historically, Funding Circle was known for peer-to-peer lending with retail investors.
In recent years, it shifted away from new retail investment (moved to run-off) and toward institutional funding structures. That shift changes the story from “you’re borrowing from people like you” to “you’re part of a capital markets machine”.
This is one of the biggest sources of confusion in modern SME lending, and it shows up most sharply when something goes wrong.
In a traditional bank loan, the borrower’s “mental model” usually matches the legal reality: you borrow from the bank, you pay the bank, and if you default the bank enforces (directly or via agents). You might still see third parties involved, but the counterparty is relatively stable.
With Funding Circle’s structure, the journey can feel like “you borrow from Funding Circle,” because Funding Circle is the brand you see, the emails you receive, and the portal you use. But the legal lender (the party who economically funds the loan) may be an investor or funding vehicle introduced through the platform.
That distinction matters at three moments.
First, at signing: it affects whether a borrower or guarantor truly understands who they are contracting with, and what “Funding Circle” is in that legal relationship.
Second, at default: it affects who has the economic incentive to recover (and how fast), and whether recoveries are handled as ongoing servicing, formal enforcement, or rapid escalation.
Third, on assignment: if the loan is sold, the person on the other side of the table may not be Funding Circle at all. It may be a debt purchaser whose business model is recoveries. The borrower/guarantor experience can change overnight, even if the contract has always allowed it.
None of that is “illegal” by itself. But it is structurally capable of creating surprise, confusion, and a feeling of betrayal - especially for personal guarantors who thought they were dealing with a single “relationship lender.”
Yes - at least in the broad shape of the business.
Funding Circle’s UK operating company accounts describe a model based on transaction/origination fees and ongoing servicing economics, plus “collection fees” recovered on defaulted loans.
The same accounts also show substantial marketing spend.
Our view: when a business is fee-led and growth-focused, the incentive is to originate - while the pain of default and enforcement is pushed onto borrowers and guarantors.
The uncomfortable part of this story is that the incentives of a platform can feel very different to the incentives of a relationship lender.
From Funding Circle’s own UK operating company accounts, the business describes itself as a facilitator of finance, and discloses operating income that includes transaction fees (fees paid when loans are originated), servicing fees (fees for administering loans), and “other fees” that can include collection fees recovered on defaulted loans.
This matters because a fee-led model is inherently front-loaded. The “win” for the platform largely happens at the moment credit is originated and scaled. The human pain for borrowers and guarantors often arrives later: when the business is distressed, when the company fails, and when enforcement begins.
It also matters because a platform model can externalise credit risk while still capturing fees. Even if Funding Circle (or its capital partners) bears economic credit losses, the immediate experience of default is still felt by borrowers and guarantors as a personal crisis - and in a PG scenario, it is literally personal.
If you put those ingredients together, you get a predictable tension.
The marketing story that gets you to sign is about speed, partnership, and “supporting small businesses.” The default story you later experience can feel like a different company, with different incentives, and with a recoveries-first mindset.
“You signed the contract” is true - and also incomplete.
Contracts are what courts enforce. But marketing and onboarding are what create expectations. And expectations matter because they influence how people interpret risk warnings, how much time they spend reading documents, and what they think “a lender” will do when trouble hits.
Funding Circle’s public positioning leans hard into speed, simplicity, and trust markers. That is part of the brand. The platform experience is designed to reduce friction.
The deep-dive question is not “is marketing illegal?” It’s more practical.
When a business is sold a story of fast, friendly SME finance, are the most consequential default realities psychologically “present” at signing?
For example: the role confusion (platform vs lender vs servicer), the reality of personal guarantees, and the possibility that defaulted debts may be sold and enforced by a third party with a much more aggressive posture.
This is why we track “claims vs disclosures” rather than trying to score points. The core issue isn’t whether the caveats exist. It’s whether they are weighted and understood.
This surprised us.
The loan contract defines the "lender" as the entity that funds the loan, with their identity "made available on request." Funding Circle is the servicer - not the lender.
We were never told who funded our loan when we signed.
In 2025, we received notices that the "investor" had changed. Our debt moved from an entity called "RHONDDA" to "GLENCAR 49" in February, then to "GLENCAR IX" in May.
We still don't know who RHONDDA is. Two transfers happened during our settlement negotiations.
The key question we've asked: Who has the authority to accept or reject our settlement offer - Funding Circle, or the current investor?
This is documented in their own accounts.
Funding Circle Ltd's 2024 Annual Accounts (filed at Companies House) disclose their "Loss Given Default" (LGD) rate: 84.4%.
This means they expect to lose 84.4% of defaulted loan balances and recover only 15.6%.
For Stage 3 (non-performing) loans, they provision at 89.9% - expecting to lose almost 90 pence of every pound.
Our calculation: if their expected recovery rate is 15.6%, their internal valuation of what they might recover from our case is far lower than what they're claiming.
Funding Circle's 2024 accounts state:
"Other fees arose principally from collection fees we recovered on defaulted loans"
This is listed as revenue, not cost recovery.
The collection charge appears to be a profit centre, not reimbursement for actual collection costs.
Yes. Their accounts confirm they routinely sell non-performing loan portfolios to third parties.
The transfers of our debt to "GLENCAR" entities (both Irish DACs - Designated Activity Companies) suggest our loan may have been part of such a sale or securitisation.
This is where borrowers and guarantors often feel the “two different worlds” most sharply: the world of origination, and the world of recoveries.
In broad terms, the flow works like this.
The loan is originated through the platform. The loan performs for a period. If it defaults, recoveries begin. In some cases, defaulted loans (or portfolios) are sold or assigned to a third party. At that point, enforcement rights can move to the assignee, including rights under the underlying loan and any associated personal guarantee.
In practical terms, that can change everything.
The tone of communications may change. Timelines may accelerate. The new party’s incentives may be different, because a debt purchaser’s core business is buying discounted defaulted debt and converting it into cash recoveries. Some purchasers are measured on recoveries performance and speed. That can translate into escalation tactics that feel more aggressive than anything experienced during the performing-loan phase.
It also creates a recurring confusion point that shows up in disputes: “Who am I meant to deal with now?” Borrowers and guarantors may still see Funding Circle as “the face of the debt,” while the legal right to enforce sits somewhere else.
This is not a claim that every debt purchaser behaves badly. It is a claim about structure: when you split origination from enforcement, the enforcement experience can diverge dramatically from the onboarding story that persuaded someone to sign a personal guarantee.
Yes.
In October 2025, a case involving Azzurro Associates and personal guarantors was reported as being headed for a High Court hearing, raising questions about assignment and who was entitled to enforce and receive payment.
The case later settled before any published judgment on the merits, so the legal questions were not definitively answered in a public court decision.
The same structural issues - unclear lender identity, assignment without notice, Personal Guarantee enforcement - appear in our case.
*We're not saying we'll win. We're saying these questions haven't been tested to judgment. The law in this area is unsettled.*
This is one of the most important background stories we found, because it shows how serious “who owns the debt?” disputes can become when personal guarantees are being enforced after assignment.
The high-level, evidence-led story is:
There were proceedings involving Azzurro Associates and personal guarantors of two defaulted loans that had been originated on the Funding Circle platform and then sold by investors to Azzurro. Funding Circle publicly announced the dispute was resolved by settlement in October 2025. Funding Circle also stated (in its announcement) that the settlement was initiated by the guarantors, that payment was made to Azzurro, and that the payment was more than the outstanding balance of the loans at default.
The critical detail is what did not happen: there was no published judgment on the merits. That means the public did not get a definitive, citable court ruling explaining (in detail) why the assignment and guarantee enforcement would succeed or fail on those facts.
So why does it matter?
Because even one case reaching that level suggests the structural questions are not “internet conspiracy.” They are legally serious enough to be litigated in the High Court when the numbers are big and personal guarantees are on the line.
For people like us, it matters because it sharpens the real-world stakes: a guarantor can end up negotiating in the shadow of litigation risk without the benefit of clear published precedent, and under pressure where losing could mean a charge on a home or insolvency outcomes.
We are not saying that case proves wrongdoing. We are saying it proves the structure creates litigation-grade disputes, and that the answers are not always transparent to the public.
Partially - and this is crucial.
The loan contract includes a "business purpose declaration" that excludes certain consumer protections.
However, the same contract states:
"This declaration does not affect the powers of the court to make an order under section 140B of the Consumer Credit Act 1974 in relation to a credit agreement where it determines that the relationship between the lender and the borrower is unfair to the borrower."
The unfair relationship provisions (sections 140A-140C) still apply. A court can intervene if it finds the relationship unfair because of the terms, the enforcement, or any other conduct by the lender.
This isn't our interpretation - it's what Funding Circle's own contract says.
In UK financial services, “vulnerability” is a specific concept. The FCA’s view (in plain English) is that some people, because of their personal circumstances, are at greater risk of harm - especially if a firm does not respond with appropriate care.
A Vulnerable Customer Policy is the practical framework firms use to turn that expectation into consistent behaviour. It usually covers:
Why it matters in disputes like ours is simple: vulnerability is one of the clearest tests of whether a firm’s processes are designed to deliver fair outcomes, or to apply maximum pressure.
It also matters because many people assume “it’s a business loan, so nothing applies.” The regulatory perimeter is complicated and eligibility for specific routes (like the Ombudsman) can be fact-specific. But FCA-authorised firms are still expected to act with care, communicate responsibly, and handle complaints properly - and the FCA has been explicit that vulnerability must be understood and accommodated across the customer journey.
In our case, we disclosed a serious family health crisis and were told we would be referred to “Business Support.” Our experience was that the recoveries approach did not materially change.
The FOS is a free, independent service that resolves complaints between financial services firms and their customers.
If a complaint is eligible and within the Ombudsman’s jurisdiction, it may be possible to refer it to the FOS. They can:
There are strict time limits (often 6 months from a “Final Response”), but eligibility and deadlines depend on the specific facts.
Maybe - but it depends on eligibility and whether the complaint is about something within the Ombudsman’s jurisdiction.
Many SME lending arrangements are not regulated credit agreements, and that can limit what the Ombudsman can consider. In practice, that means some borrower/guarantor disputes end up being handled through negotiation or court, not through an ombudsman decision.
This is a structural problem that people don’t appreciate until they are already in the middle of a dispute.
At the beginning, the relationship feels simple: “Funding Circle lent me money.” The brand, portal, and communications are unified.
But once you introduce third-party capital providers and the possibility of assignment, the relationship becomes multi-party.
There can be an originator/platform/servicer (Funding Circle), a legal lender or SPV/investor behind the scenes (depending on the product and structure), and a debt purchaser/servicer after any sale. Each can point to different responsibilities and different complaint routes.
That creates real-world friction.
If you complain about what happened pre-sale, the purchaser may say “that was before we owned it.” If you complain about post-sale enforcement, the originator may say “we no longer own it.” If you are trying to use a formal complaints process, you can lose time being bounced between parties. And if you are trying to understand who has authority to settle, the structure can make it feel like you’re negotiating with someone who is not the real decision-maker.
This is one reason disputes can end up being resolved through negotiation under pressure rather than through clean “complaints and remedies” pathways.
This is the key dispute.
Funding Circle's position is that when a loan defaults, interest is "frozen" - but "contractual interest" (the interest that *would have been* paid over the full term) remains due as a lump sum.
Their Final Response stated:
"Once the account defaults the interest is frozen, but the contractual interest is still due - this is the interest that would have been repaid should your business have maintained the full term length."
To us, this means being charged interest for 45 months we never had use of the money. The loan ended after 27 months. The business failed. But they want interest as if we'd borrowed for six years.
On the same day in late October 2025:
Morning: We were asked for property value and mortgage information to "continue reviewing" our settlement offer.
Afternoon: We were told the offer had been "rejected."
These positions are mutually exclusive. Either they were still reviewing (and needed more data) or they had decided (and rejected it). The written record shows both happened on the same day.
A Funding Circle agent emailed us in November 2025:
"You are correct to point out the discrepancy in the figures quoted in my previous email, and I apologise for that oversight."
Six weeks later, their Final Response stated:
"We have been unable to evidence an occasion where you were advised of the incorrect balance."
We have both emails. These statements cannot both be true.
Yes. Multiple times.
Funding Circle stated they would accept a minimal monthly payment (even £1/month) but only if secured by a charge over our property.
Their Final Response confirmed:
"If a fixed charge is not provided voluntarily, then it could be obtained via the Court."
We have not agreed. We believe it's disproportionate given we've already repaid almost two-thirds of what we borrowed.
No. This website documents our experience based on documents in our possession.
If you're in a similar situation, get qualified advice from:
We're sharing our story, not providing professional guidance.
Because there's almost no information online about how Funding Circle handles defaults.
Most reviews cover the application process - how quick and easy it is to get a loan. Very few describe what happens when things go wrong.
We wished someone had warned us. This is our attempt to be that warning for others.
We've been careful to:
Everything on this website is true to the best of our knowledge. We believe we have the right to share our genuine experience.
If you're in a similar situation:
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