james
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Post by james on Feb 24, 2015 1:18:36 GMT
What steps are taken to reduce the risk of loss due to long firm fraud? Am I correct in my understanding that the insurance does not cover this risk?
What is the average company lifetime for your borrowers?
For those unfamiliar with it, long firm fraud involves setting up a business and trading fior potentially years with increasing borrowing/sales then when enough money is involved, vanishing with all goods/credit. Networks of related fraudulent companies can be used to help each company in the network demonstrate a good and growing trading history.
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Post by hugoarchover on Feb 26, 2015 16:36:01 GMT
Hi jamesLong firm fraud is quite rare thankfully and when borrowing is involved they tend to target large automated lenders - that is the exact opposite of how we work. We always work with firms we have met, have trading histories running into double figures, are growing and have a proven track record of lending and more importantly paying it back. The insurance firms we use have extensive multi data due diligence and underwriting systems (far better than any off the shelf packages used by other P2P lenders) to mitigate against this type of fraud and look at the individuals concerned as well as the operational relationship on both sides of the fence. If you like, this provides additional comfort to our lenders and it is why our institutional lenders like our model so much - as one pundit said the other day re: due diligence "some P2P lenders are learning on the job!' We cannot divulge long firm fraud data we have seen but i can tell you one of our insurers has only had one instance of serious fraud in the last 14 years. We are confident that we have good cover and that we will work closely with the insurers and their extensive debt collection teams if fraud ever does arise to recover any funds for our lenders. You are correct that should we ever be exposed to this type of fraud the insurance would not be able to cover it. However, for the insurers and ourselves we can still pursue the individuals and maximise what additional security we have. I hope that helps... Hugo
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james
Posts: 2,205
Likes: 955
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Post by james on Feb 26, 2015 20:59:04 GMT
Thanks Hugo. Good response!
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