Dissatisfied investors prevail after a storm of complaints – E24

The Financial Appeal Board believes that a number of private investors are entitled to greater financial compensation after investing their savings with Monio.

Last spring, a total of 74 private investors filed a complaint against Monio, now acquired by Folkeinvest, with the Financial Appeals Board.

The crowdfunding platform made it possible for ordinary people to invest their savings in loans to companies, which are often companies in the real estate industry and cannot get a loan from a bank.

The storm of complaints came after E24 published several articles about some companies that were allowed to borrow money from Monio at the beginning of 2023.

The publicity meant that Monio and its owner, Sparebank 1 SR-Bank, paid NOK 29 million in compensation to dissatisfied investors.

Investors who complained to the Financial Appeals Board believed that Monio had neglected its duty to investigate so blatantly that they demanded full compensation for the amounts invested, plus interest.

Two of the 74 appeal cases have now been decided and will provide necessary direction for the court's handling of the other cases. Here the complainants are partially supported.

The court's decision means that Monio's owners have to disburse more money to small Norwegian savers.

Complainants receive more compensation

The vast majority of complaints relate to loans brokered on behalf of TA-Eiendom AS and TA-Eiendom 2 AS, as well as MG Eiendomsutvikling 2 AS.

E24 previously discussed how Monio lent a total of NOK 160 million to the owner of the two companies mentioned first, despite the fact that the owner had previously been convicted of embezzlement and placed under bankruptcy quarantine. These were conditions that were not communicated to investors.

Monio brokered a loan for a real estate project sponsored by MG Eiendomsutvikling 2 to “complete” the cabin. But Moneo never investigated, and thus never discovered, that no cabin had ever been built on the lot.

The latest decision issued by the Financial Appeals Board means the following:

• All lenders invested in non-performing loans of TA-Eiendom AS and/or TA-Eiendom 2 AS will be repaid. Installments, interest and compensation already paid by Sparebanken SR 1 are deducted from the amount.
• A corresponding subsequent settlement will be paid to investors in the last defaulted loan of MG Eiendomsutvikling 2 AS.

Low limit

The decision was issued with the opposition. The majority in the court points to the increased credit risk of crowdfunding, compared to credit for example
Through the banking system, it is increasingly important that “all available information” about the loan project is visible.

The decision states that “high interest rates do not compensate for the lack of available information relevant to assessing credit risks.”

The majority on the Financial Appeals Board write in their reasoning that the threshold for violations of the duty to investigate and provide information that would give rise to a claim for compensation is low.

“In this case, the threshold has been crossed,” the decision said.

He accepts the decision

Folkeinvest AS, which acquired Monio in June 2023, will follow the court's decision.

– We will not oppose the decisions of a competent professional environment such as the Financial Appeals Board. If the other party accepts the court's decision, it will stand, says managing director Øyvind Fries.

The Folkeinvest director told E24 that he does not currently know how much financial compensation he will receive.

Sparebank 1 SR-Bank, which owned all the shares in Monio before the takeover, continued as a significant shareholder of Folkeinvest AS after the deal. The acquisition was approved by the Norwegian Financial Supervision Authority in December and was officially completed in the same month.

– We are now following the decision of the Financial Appeals Board and will make adjustments accordingly towards investors, says Øyvind Nove Askeland, Communications Director at SpareBank 1 SR-Bank, in a press release.

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