Monetus
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Post by Monetus on Mar 27, 2018 14:43:51 GMT
I'm very confident/happy in the platform overall and hold a substantial sum there but following the Collateral situation I am being extremely thorough in my due diligence of platforms and regulations etc. According to this report: p2pmoney.co.uk/companies.htm#registrationsIt would appear that BridgeCrowd are registered with the FCA, but does not currently hold client money permission.They are also registered with the FCA, but does not currently hold "operating an electronic system in relation to lending or advising on P2P agreements permissions" which I believe to be the industry specific requirement. Is there anything specific to BridgeCrowd and their loan agreements/way they fund loans (perhaps not "true" P2P etc) that would mean they don't require these permissions? The FAQ's on their website say that client money is 'ring fenced' for example but it appears they don't have client money permission so I'm just trying to get my head around things here...
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IFISAcava
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Post by IFISAcava on Mar 27, 2018 16:28:56 GMT
I'm very confident/happy in the platform overall and hold a substantial sum there but following the Collateral situation I am being extremely thorough in my due diligence of platforms and regulations etc. According to this report: p2pmoney.co.uk/companies.htm#registrationsIt would appear that BridgeCrowd are registered with the FCA, but does not currently hold client money permission.They are also registered with the FCA, but does not currently hold "operating an electronic system in relation to lending or advising on P2P agreements permissions" which I believe to be the industry specific requirement. Is there anything specific to BridgeCrowd and their loan agreements/way they fund loans (perhaps not "true" P2P etc) that would mean they don't require these permissions? The FAQ's on their website say that client money is 'ring fenced' for example but it appears they don't have client money permission so I'm just trying to get my head around things here... I saw this and had the same thought regarding my own investments there and I don't know the answer. It is true that you don't really invest via an electronic system, rather you make a request that is confirmed by manual email. Also, many firms ring fence client accounts without FCA permission But over to the forum for expert advice...
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tx
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Post by tx on Mar 27, 2018 19:40:16 GMT
...many firms ring fence client accounts without FCA permission That’s very interesting, I didn’t know ring fence client money need permission?! I always thought that’s the right thing to do, why would it need permission? I always thought, with FCA full authorisation means they have done the right thing to ring fence client money. You reminded me a recent email I had with the director. I asked if BC has full authorisation, he promptly replied yes they do, as usual, he is on top of communication. But then my next emails asked, if my funds is ring fenced when it is committed but before drawdown, he never replied ... Maybe your speculation about FCA permission for ring fencing client money has some truth ...
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Monetus
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Post by Monetus on Mar 29, 2018 11:39:48 GMT
I'm very confident/happy in the platform overall and hold a substantial sum there but following the Collateral situation I am being extremely thorough in my due diligence of platforms and regulations etc. According to this report: p2pmoney.co.uk/companies.htm#registrationsIt would appear that BridgeCrowd are registered with the FCA, but does not currently hold client money permission.They are also registered with the FCA, but does not currently hold "operating an electronic system in relation to lending or advising on P2P agreements permissions" which I believe to be the industry specific requirement. Is there anything specific to BridgeCrowd and their loan agreements/way they fund loans (perhaps not "true" P2P etc) that would mean they don't require these permissions? The FAQ's on their website say that client money is 'ring fenced' for example but it appears they don't have client money permission so I'm just trying to get my head around things here... But over to the forum for expert advice... Could one of the mods or admins chime in here perhaps? I'm unsure of the status of permissions here and what exactly is required...
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tx
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Post by tx on Mar 29, 2018 11:41:35 GMT
Please ... some clarification would be good.
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Post by dan1 on Mar 29, 2018 12:09:20 GMT
But over to the forum for expert advice... Could one of the mods or admins chime in here perhaps? I'm unsure of the status of permissions here and what exactly is required... /Mod hat off - I'm not speaking for the mods or admins here Speaking personally, I'm just a lender like all of you other users, I'm certainly no expert in FCA authorisations or anything else for that matter. Being a mod or admin is not about professional experience, although this may help I guess, it's just that we tend to spend an unhealthily long time around these part.
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Post by justuslee on Mar 29, 2018 12:21:09 GMT
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Greenwood2
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Post by Greenwood2 on Mar 29, 2018 13:11:34 GMT
BC have the equivalent of the letter referred to (in the link above) in the T&Cs under 'Declaration of Trust'.
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michaelc
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Post by michaelc on Apr 4, 2018 16:20:43 GMT
I have asked if they can provide a response on this thread.
My own view is that even if their FCA status isn't 100% i-dotted and t-crossed for what they are doing now (and I don't know that - it may already be in 100% perfect shape) then I would certainly be grateful for an update of the detail of anything that isn't 100% ideal and their plans & timescales to fix it with the FCA.
My _guess_ is that their FCA approvals were originally set up for running an email only based manual system. Now they have gone to running a platform online perhaps they need to revisit what they require in terms of FCA permission?
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Post by thebridgecrowd on Apr 5, 2018 9:18:42 GMT
I'm very confident/happy in the platform overall and hold a substantial sum there but following the Collateral situation I am being extremely thorough in my due diligence of platforms and regulations etc. According to this report: p2pmoney.co.uk/companies.htm#registrationsIt would appear that BridgeCrowd are registered with the FCA, but does not currently hold client money permission.They are also registered with the FCA, but does not currently hold "operating an electronic system in relation to lending or advising on P2P agreements permissions" which I believe to be the industry specific requirement. Is there anything specific to BridgeCrowd and their loan agreements/way they fund loans (perhaps not "true" P2P etc) that would mean they don't require these permissions? The FAQ's on their website say that client money is 'ring fenced' for example but it appears they don't have client money permission so I'm just trying to get my head around things here...
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Post by thebridgecrowd on Apr 5, 2018 10:47:13 GMT
Hi Monetus, Thank you for your comments and queries. My apologies for not replying earlier. I was under the impression that the P2P forum automatically emailed me whenever a comment was made on the BC forum, but that did not happen (or it ended up in Junk). Thank you for the investors that emailed in personally to ask me to respond. So there is some obvious confusion about the industry, and I will attempt to clarify as succinctly as possible without giving away to many of our trade secrets. Social Money Ltd is regulated and authorised by the FCA for certain regulated activities as stated below. However the loans that the BridgeCrowd make and the loans that you make are unregulated. - Agreeing to carry on a regulated activity
- It may be able to control client money if it has the necessary requirements.
- Credit Broking
- Debt Administration
- Debt-collecting
- Debt-counselling
- Exercising/having right to exercise lender's rights and duties under a regulated credit agreement (excluding high-cost short-term credit, bill of sale agreement, and home collected credit agreement)
- Entering into regulated credit agreement as Lender (Excluding high-cost short-term credit, bill of sale agreement, and home collected credit agreement)
Social Money does a variety of lending. It makes FCA regulated loans and FCA un-regulated loans. The FCA regulated loans are consumer credit loans and these go under the the brand Payl8r.com. The FCA unregulated loans (or regulatory exempt loans) are the bridging loans made under the brand BridgeCrowd.com. These FCA unregulated bridging loans do not require any FCA authorisation nor do they require any FCA permissions to make. As such, the company does not need the permission "holding client money" nor "electronic Peer to Peer" in order to trade in unregulated Bridging loans. That being said, we like to do things correctly with proper governance. As such we voluntarily follow many of the FCA principles and have a strong reconciling system of accounts. In particular we ensure that all client money is held on trust and is ring fenced from the operations of Social Money Ltd, that the funds are held in a segregated client trust account with Lloyds Bank, that investor accounts are reconciled and balanced daily, they are audited, and in the event of insolvency, both the client money and the client investments in loans are held on trust and ring-fenced and must be paid back to the investors before any residual funds are disposed of by liquidators. You will note also that "we can control client money" - although even so, this permission is not strictly needed for our modus operandi. For more information please read here: www.fca.org.uk/firms/client-money-assetsNow turning to the permission to hold a Electronic P2P platform; again for similar reasons stated above Social Money does not need to hold this permission for our structure of Bridging loans. Firstly the bridging loans that BridgeCrowd makes are FCA unregulated (i.e in a nutshell our loans are not high-street regulated mortgages 1st charges over residential properties). Secondly, the permission for an Electronic P2P platform is required when the "electronic platform" matches borrowers directly with lenders. Our modus operandi is different, as we allow investors to lend to Social Money and then choose the down stream borrower by selecting them on an individual basis - it is not the electronic P2P platform that does it. There are also a host of other reasons why the EP2P is not required under our current MO and we have pages of solicitors and barristers opinions this point. You may also note that LendInvest once held the EP2P permission but has since said that it is withdrawing it and no longer holds it (possibly for admin and cost reasons) and if you look at the register for LendInvest you will note they also do not have the "holding client money" permission. As for the state Collateral, I can not comment too much on them as I do not know the details and I am only speculating on what went occurred. However, on reading the published articles it appears that it held a permission to operate a P2P platform under "interim permission". The interim permission was a period when the OFT regulated the P2P. It then moved regualtion to the FCA and firms had to present their business model in order to get permissions. The article states that the interim permission lapsed. Thus presumably (and I guess here) they were operating an EP2P with out a licence (but thought they did) and hence have been asked to pause. Rather more wrongly, in my opinion, is P2P / CrowdFundning platforms that have set-up but do not have a lending background and whose philosophy is "caveat emptor" / "buyer beware". They allow the brokers who act for the borrower to instruct the valuations and package the case for the website with little lending due diligence internally and little bridging knowledge either. This is absurd as it allows brokers that have a conflicting interest to do most of the underwriting. I even know of one very very large property platform that has stated to brokers "just send us what other lenders won't do, and we will do it". I think we will start to see many bad loans and capital write offs popping up on these platforms (if they haven't already) and and this will likely tarnish the industry somewhat. I appreciate that it may be hard for investors to do their due diligence on every platform. My advice when analysing company performance would be (a) to look at the company's lending background and the people behind it (b)see if the company invests its own funds and (c) if the return offered is high then there is probably a reason for that. Our aim is for BridgeCrowd to ride through the P2P "bad headlines" with trust and strong and safe returns for our investors. On another note, Social Money just posted a profit of £550k for 2017 and 2018 accounts are looking healthier still. On a further note, we have actually applied for many additional permissions (including EP2P so that we can offer ISAS) and within the next 6 months we intend to launch a new site and new brand with a wider variety of products and new offerings. I hope and expect that all our current investors will be very impressed stay with us for a long long time. Thank you for taking the time to read this. I will probably write an email to all investors covering some of these matters, albeit in less detail. Thank you for your continued support. Louis Alexander MD
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michaelc
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Post by michaelc on Apr 5, 2018 15:36:26 GMT
Thanks for a very considered answer - I certainly found it helpful and reassuring.
Perhaps not a BC specific question so maybe I'll pose it in the general forum (should I?), but it appears to be the case that certain lending is not a regulated activity meaning that certain platforms (presumably including BC) don't actually need FCA regulation. However, many of the lenders are what I think the FCA would class as consumer investors. Is it not a regulated activity taking cash from consumer investors and putting it into a client account?
Related is, is it actually possible to have a client account without FCA approval. I mean you can segregate funds as much as you want, but what protects them from any future administrator, receiver or liquidator if they don't have special status granted by the FCA?
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ant1
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Post by ant1 on Apr 5, 2018 21:52:41 GMT
Thanks for the update Louis,
Hopefully this useful update will reassure investors in the platform. And it is encouraging to hear of the new developments coming later this year.
Keep up the good work.
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nick
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Post by nick on Aug 16, 2018 22:18:19 GMT
Hi Monetus, Thank you for your comments and queries. My apologies for not replying earlier. I was under the impression that the P2P forum automatically emailed me whenever a comment was made on the BC forum, but that did not happen (or it ended up in Junk). Thank you for the investors that emailed in personally to ask me to respond. So there is some obvious confusion about the industry, and I will attempt to clarify as succinctly as possible without giving away to many of our trade secrets. The BridgeCrowd (Social Money Ltd) is regulated and authorised by the FCA. It holds all the requisites permissions to carry out the current BirdgeCrowd business model. Those permissions being:- - Agreeing to carry on a regulated activity
- It may be able to control client money if it has the necessary requirements.
- Credit Broking
- Debt Administration
- Debt-collecting
- Debt-counselling
- Exercising/having right to exercise lender's rights and duties under a regulated credit agreement (excluding high-cost short-term credit, bill of sale agreement, and home collected credit agreement)
- Entering into regulated credit agreement as Lender (Excluding high-cost short-term credit, bill of sale agreement, and home collected credit agreement)
Social Money does a variety of lending. It makes FCA regulated loans and FCA un-regulated loans. The FCA regulated loans are consumer credit loans and these go under the the brand Payl8r.com". The FCA unregulated loans (or regulatory exempt loans) are the bridging loans made under the brand BridgeCrowd.com. These FCA unregulated bridging loans do not require any FCA authorisation nor do they require any FCA permissions to make. As such, the company does not need the permission "holding client money" nor "electronic Peer to Peer" in order to trade in unregulated Bridging loans. That being said, we like to do things correctly with proper governance. As such we voluntarily follow the CASS rules on holding client money. This is the FCA Client Money Asset Source Book. In particular we ensure that all client money is ring fenced from the operations of Social Money Ltd, that the funds are held in a segregated client account with Lloyds Bank, that investor accounts are reconciled and balanced daily, they are audited, and in the event of insolvency, both the client money and the client investments in loans are held on trust and ring-fenced and must be paid back to the investors before any residual funds are disposed of by liquidators. You will note also that "we can control client money" - although even so, this permission is not strictly needed for our modus operandi. For more information please read here: www.fca.org.uk/firms/client-money-assetsNow turning to the permission to hold a Electronic P2P platform; again for similar reasons stated above Social Money does not need to hold this permission for the Bridging loans. Firstly the bridging loans that Social Money makes are FCA unregulated (i.e in a nutshell our loans are not high-street regulated mortgages 1st charges over residential properties). Secondly, the permission for an Electronic P2P platform is required when the "electronic platform" matches borrowers directly with lenders automatically (i.e in the absence of selection). Imagine small micro loans that are auto matched based on criteria (think Zopa and RateSetter). Our modus operandi is different, as we allow investors to choose their loans by selecting them on an individual basis - it is not the electronic platform that does it. There are also a host of other reasons why the EP2P is not required under our current MO and we have pages of solicitors and barristers opinions this point. You may also note that LendInvest once held the EP2P permission but has since said that it is withdrawing it and no longer holds it (possibly for admin and cost reasons) and if you look at the register for LendInvest you will note they also do not have the "holding client money" permission. As for the state Collateral, I can not comment too much on them as I do not know the details and I am only speculating on what went occurred. However, on reading the published articles it appears that it held a permission to operate a P2P platform under "interim permission". The interim permission was a period when the OFT regulated the P2P. It then moved regualtion to the FCA and firms had to present their business model in order to get permissions. The article states that the interim permission lapsed. Thus presumably (and I guess here) they were operating an EP2P with out a licence (but thought they did) and hence have been asked to pause. Rather more wrongly, in my opinion, is P2P platforms that have set-up but do not have a lending background and whose philosophy is "caveat emptor" / "buyer beware". They allow the brokers who act for the borrower to instruct the valuations and package the case for the website with little lending due diligence internally and little bridging knowledge either. This is absurd as it allows brokers that have a conflicting interest to do most of the underwriting. I even know of one very very large property platform that has stated to brokers "just send us what other lenders won't do, and we will do it". I think we will start to see many bad loans and capital write offs popping up on these platforms (if they haven't already) and and this will likely tarnish the industry somewhat. I appreciate that it may be hard for investors to do their due diligence on every platform. My advice when analysing company performance would be (a) to look at the company's lending background and the people behind it (b)see if the company invests its own funds and (c) if the return offered is high then there is probably a reason for that. Our aim is for BridgeCrowd to ride through the P2P "bad headlines" with trust and strong and safe returns for our investors. On another note, Social Money just posted a profit of £550k for 2017 and 2018 accounts are looking healthier still. On a further note, we have actually applied for many additional permissions (including EP2P so that we can offer ISAS) and within the next 6 months we intend to launch a new site and new brand with a wider variety of products and new offerings. I hope and expect that all our current investors will be very impressed stay with us for a long long time. Thank you for taking the time to read this. I will probably write an email to all investors covering some of these matters, albeit in less detail. Thank you for your continued support. Louis Alexander MD thebridgecrowd - thank you for providing your detailed response above. I'm been considering using BC for a while but still can't get comfortable with the company's regulatory permissions. The two primary reasons you give for supporting why you do not need permission 'to operate an electronic system to lending' do appear to be particularly relevant. PERG 2 of the handbook gives a clear definition of this regulated activity. Whether the underlying credit agreements are regulated or unregulated does not appear to be relevant, only that it has to be a article 36H agreement. An electronic platform need not automatically match borrowers with lenders to be caught by this activity, the platform merely needs to facilitate the agreement between borrower and lender. The fact that the platform is determining which loans should be made been lender and borrow based on lenders specific instruction (ie manual selection) is still caught by the definition. Maybe the matching you undertake is a manual process not undertaken electronically by the platform? Reference is also made to a number of other reasons why the business does not need this regulatory permission supported by pages of solicitors and barrister opinions. If this is the case, then it is comforting that significant resource and thought has been applied in reaching the conclusions, but also concern that the answer is/was not so clear-cut. Are you able to provide any further specific detail on why your platform as it is currently operated does not meet the definition of "operating an electronic system in relation to lending". Any further detail that could provide me with comfort over the firm's regulatory permissions would be appreciated. Obviously after the Collateral debacle, this is an area of increasing scrutiny. Unfortunately for me, whilst I raised a number of queries with Collateral on their regulatory permissions via this forum prior to investing with them, I naively accepted their assurance of compliance at face value rather than obtaining a full understanding of their regulatory requirement. Putting a aside any regulatory issues, there is also an important tax implication for lenders if the platform does not have the specific permission for "operating an electronic system in relation to lending", namely the availability tax relief on income from losses. HMRC SAIM 12000 ( assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/597959/Income_tax_relief_for_irrecoverable_peer_to_peer_loans_FINAL_GUIDANCE__2_.pdf ) states that one of the criteria that must be met for a lender to be able to claim for P2P loss relief is only available for loans made through an operator who has permission.......to operate an electronic system in relation to the lending of money. Is this your understanding?
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SteveT
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Post by SteveT on Aug 17, 2018 8:58:22 GMT
SAIM12000 does not apply to BC loans
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